MSIPL IR ISSUE , MANESAR VIOLENCE , MARUTI STRIKE , INDUSTRIAL RELATIONS CASE STUDY , MARUTI LABOUR CONFLICT , MARUTI GURGAON

1. LEGAL
MARUTI
DISPUTE
0
ABHISHEK
DHAWAN
12/BBS/0069
0
MANESAR
VIOLENCE
MARUTI
SUZUKI
INDIA
LIMITED
LABOUR
POLICY
DISPUTE
SUBMITTED
TO
–
DR
RAKESH
KUMAR
SAINI
DEPARTMENT
OF
MANAGEMENT
STUDIES
DEEN
DAYAL
UPADHYAYA
COLLEGE

2. LEGAL
MARUTI
DISPUTE
1
ABHISHEK
DHAWAN
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INTRODUCTION
Maruti
Udyog
Limited
was
established
in
February
1981,
though
the
actual
production
commenced
only
in
1983.
It
started
with
Maruti
800,
based
on
the
SUZUKI
ALTO,
which
at
the
time
was
the
only
modern
car
available
in
India.
Its
only
competitors
were
Hindustan
Ambassador
and
Premier
Padmini.
Originally,
the
Indian
government,
and
26%
by
Suzuki
of
Japan
owned
74%
of
the
company.
As
of
May
2007,
the
government
of
India
sold
its
complete
share
to
Indian
financial
institutions
and
no
longer
has
any
stake
in
Maruti
Udyog.
In
1982,
a
license
&
Joint
Venture
Agreement
(JVA)
is
signed
between
Maruti
Udyog
Ltd.
and
Suzuki
of
Japan.
At
first,
Maruti
Suzuki
was
mainly
an
importer
of
cars.
In
India's
closed
market,
Maruti
received
the
right
to
import
40,000
fully
built-­‐up
Suzukis
in
the
first
two
years,
and
even
after
that
the
early
goal
was
to
use
only
33%
indigenous
parts.
This
upset
the
local
manufacturers
considerably.
There
were
also
some
concerns
that
the
Indian
market
was
too
small
to
absorb
the
comparatively
large
production
planned
by
Maruti
Suzuki,
with
the
government
even
considering
adjusting
the
petrol
tax
and
lowering
the
excise
duty
in
order
to
boost
sales.Finally,
in
1983,
the
Maruti
800
is
released.
This
796
cc
hatchback
is
based
on
the
SS80
Suzuki
Alto
and
is
India’s
first
affordable
car.
Initial
product
plan
is
40%
saloons,
and
60%
Maruti
Van.[15]
Local
production
commences
in
December
1983.[11]
In
1984
the
Maruti
Van,
with
the
same
three-­‐cylinder
engine
as
the
800,
is
released.
Installed
capacity
of
the
plant
in
Gurgaon,
reaches
40,000
units.

3. LEGAL
MARUTI
DISPUTE
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ABHISHEK
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JOINT
VENTURE
REALED
ISSUES
Relationship
between
the
Government
of
India,
under
the
United
Front
(India)
coalition
and
Suzuki
Motor
Corporation
over
the
joint
venture
was
a
point
of
heated
debate
in
the
Indian
media
until
Suzuki
Motor
Corporation
gained
the
controlling
stake.
This
highly
profitable
joint
venture
that
had
a
near
monopolistic
trade
in
the
Indian
automobile
market
and
the
nature
of
the
partnership
built
up
till
then
was
the
underlying
reason
for
most
issues.
The
success
of
the
joint
venture
led
Suzuki
to
increase
its
equity
from
26%
to
40%
in
1987,
and
further
to
50%
in
1992.
In
1982
both
the
venture
partners
had
entered
into
an
agreement
to
nominate
their
candidate
for
the
post
of
Managing
Director
and
every
Managing
Director
will
have
tenure
of
five
years
Suzuki
did
not
attend
the
Annual
General
Meeting
of
the
Board
with
the
reason
of
it
being
called
on
a
short
notice.
Later
Suzuki
Motor
Corporation
went
on
record
to
state
that
Bhaskarudu
was
"incompetent"
and
wanted
someone
else.
However,
the
Ministry
of
Industries,
Government
of
India
refuted
the
charges.
Media
stated
from
the
Maruti
Suzuki
sources
that
Bhaskarudu
was
interested
to
indigenize
most
of
components
for
the
models
including
gearboxes
especially
for
Maruti
800.
Suzuki
also
felt
that
Bhaskarudu
was
a
proxy
for
the
Government
and
would
not
let
it
increase
its
stake
in
the
venture.
If
Maruti
Suzuki
had
been
able
to
indigenise
gear
boxes
then
Maruti
Suzuki
would
have
been
able
to
manufacture
all
the

4. LEGAL
MARUTI
DISPUTE
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ABHISHEK
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models
without
the
technical
assistance
from
Suzuki.
Till
today
the
issue
of
localization
of
gearboxes
is
highlighted
in
the
press.
INDUSTRIAL
RELATIONS
Since
its
founding
in
1983,
Maruti
Udyog
Limited
experienced
problems
with
its
labour
force.
The
Indian
labour
it
hired
readily
accepted
Japanese
work
culture
and
the
modern
manufacturing
process.
In
1997,
there
was
a
change
in
ownership,
and
Maruti
became
predominantly
government
controlled.
Shortly
thereafter,
conflict
between
the
United
Front
Government
and
Suzuki
started.
Labour
unrest
started
under
management
of
Indian
central
government.
In
2000,
a
major
industrial
relations
issue
began
and
employees
of
Maruti
went
on
an
indefinite
strike,
demanding
among
other
things,
major
revisions
to
their
wages,
incentives
and
pensions.
Employees
used
slowdown
in
October
2000,
to
press
a
revision
to
their
incentive-­‐
linked
pay.
In
parallel,
after
elections
and
a
new
central
government
led
by
NDA
alliance,
India
pursued
a
disinvestments
policy.
Along
with
many
other
government
owned
companies,
the
new
administration
proposed
to
sell
part
of
its
stake
in
Maruti
Suzuki
in
a
public
offering.
The
worker's
union
opposed
this
sell-­‐off
plan
on
the
grounds
that
the
company
will
lose
a
major
business
advantage
of
being
subsidised
by
the
Government,
and
the
union
has
better
protection
while
the
company
remains
in
control
of
the
government.

5. LEGAL
MARUTI
DISPUTE
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The
standoff
between
the
union
and
the
management
continued
through
2001.
The
management
refused
union
demands
citing
increased
competition
and
lower
margins.
The
central
government
prevailed
and
privatized
Maruti
in
2002.
Suzuki
became
the
majority
owner
of
Maruti
Udyog
Limited.
MANESAR
VIOLENCE-­‐BACKGROUND
On
18
July
2012,
Maruti's
Manesar
plant
was
hit
by
violence
as
workers
at
one
of
its
auto
factories
attacked
supervisors
and
started
a
fire
that
killed
a
company
official
and
injured
100
managers,
including
two
Japanese
expatriates.
The
violent
mob
also
injured
nine
policemen.
The
company's
General
Manager
of
Human
Resources
had
both
arms
and
legs
broken
by
his
attackers,
unable
to
leave
the
building
that
was
set
ablaze,
and
was
charred
to
death.
The
incident
is
the
worst-­‐ever
for
Suzuki
since
the
company
began
operations
in
India
in
1983.

6. LEGAL
MARUTI
DISPUTE
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ABHISHEK
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PREMISE
Since
April
2012,
the
Manesar
union
had
demanded
a
three-­‐fold
increase
in
basic
salary,
a
monthly
conveyance
allowance
of
10,000,
a
laundry
allowance
of
3,000,
a
gift
with
every
new
car
launch,
and
a
house
for
every
worker
who
wants
one
or
cheaper
home
loans
for
those
who
want
to
build
their
own
houses.
Initial
reports
claimed
wage
dispute
and
a
union
spokesman
alleged
the
incident
may
be
caste-­‐related.

7. LEGAL
MARUTI
DISPUTE
6
ABHISHEK
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COMPANY’S
STAND
According
to
the
Maruti
Suzuki
Workers
Union
a
supervisor
had
abused
and
made
discriminatory
comments
to
a
low-­‐caste
worker.
The
company
and
the
police
denied
these
claims.
The
supervisor
alleged
was
found
to
belong
to
a
tribal
heritage
and
outside
of
Hindu
caste
system;
further,
the
numerous
workers
involved
in
violence
were
not
affiliated
with
caste
either.
Maruti
said
the
unrest
began,
not
over
wage
discussions,
but
after
the
workers'
union
demanded
the
reinstatement
of
a
worker
who
had
been
suspended
for
beating
a
supervisor.
The
workers
claim
harsh
working
conditions
and
extensive
hiring
of
low-­‐paid
contract
workers
which
are
paid
about
$126
a
month,
about
half
the
minimum
wage
of
permanent
employees.
Maruti
employees
currently
earn
allowances
in
addition
to
their
base
wage.
Company
executives
denied
harsh
conditions
and
claim
they
hired
entry-­‐level
workers
on
contracts
and
made
them
permanent
as
they
gained
experience.
It
was
also
claimed
that
the
company
deployed
bouncers.

8. LEGAL
MARUTI
DISPUTE
7
ABHISHEK
DHAWAN
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7
FURTHER
DEVELOPMENT
India
Today
claimed
that
its
interviews
of
witnesses
present
at
the
plant
confirm
the
dispute
was
over
the
suspended
worker.
The
management
insisted
that
they
must
wait
for
completion
of
inquiry
underway
before
they
can
take
any
action
on
the
employee
suspended
for
beating
up
his
supervisor.
The
management
was
then
told,
"you
will
be
beaten
up
after
we
get
a
signal."
Thereafter,
the
workers
broke
up
into
groups,
went
on
to
set
the
shop
floor
as
well
as
all
offices
afire.
They
searched
for
management
officials
and
proceeded
with
a
beating
of
the
officials
at
the
site
with
iron
rods.
The
police,
in
its
First
Information
Report
(FIR),
claimed
on
21
July
that
Manesar
violence
may
be
the
result
of
a
planned
violence
by
a
section
of
workers
and
union
leaders.
The
report
claimed
the
worker's
action
was
recorded
on
close
circuit
cameras
installed
within
the
company
premises.
The
workers
took
several
managers
and
high
ranked
management
officials
hostage.
The
responsible
Special
Investigative
Team
official
claimed,
"some
union
leaders
may
be
aware
of
the
facts,
so
they
burnt
down
the
main
servers
and
more
than
700
computers."
The
recorded
CCTV
footage
has
been
used
to
determine
the
sequence
of
events
and
people
involved.
Per
the
FIR,
police
have
arrested
91
people
and
are
searching
for
55
additional
accused.

9. LEGAL
MARUTI
DISPUTE
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ABHISHEK
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LEGAL
OBLIGATION
AND
ACTION
Maruti
Suzuki
in
its
statement
on
the
unrest,
announced
that
all
work
at
the
Manesar
plant
has
been
suspended
indefinitely.
A
Suzuki
spokesman
said
Manesar
violence
won't
affect
the
auto
maker's
business
plans
for
India.
The
shut
down
of
Manesar
plant
is
leading
to
a
loss
of
about
Rs
75
crore
per
day.
On
21
July
2012,
citing
safety
concerns,
the
company
announced
a
lockout
under
The
Industrial
Disputes
Act,
1947
pending
results
of
an
inquiry
the
company
has
requested
of
the
Haryana
government
into
the
causes
of
the
disorder.
Under
the
provisions
of
The
Industrial
Disputes
Act
for
wages,
the
report
claimed,
employees
are
expected
to
be
paid
for
the
duration
of
the
lockout.

10. LEGAL
MARUTI
DISPUTE
9
ABHISHEK
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ACTION
TO
NORMALISATION
On
26
July
2012,
Maruti
announced
employees
would
not
be
paid
for
the
period
of
lock-­‐out
in
accordance
with
Indian
labour
laws.
The
company
further
announced
that
it
will
stop
using
contract
workers
by
March
2013.
The
report
claimed
the
salary
difference
between
contract
workers
and
permanent
workers
has
been
much
smaller
than
initial
media
reports
-­‐
the
contract
worker
at
Maruti
received
about
11,500
per
month,
while
a
permanent
worker
received
about
12,500
a
month
at
start,
which
increased
in
three
years
to
21,000-­‐22,000
per
month.
In
a
separate
report,
a
contractor
who
was
providing
contract
employees
to
Maruti
claimed
the
company
gave
its
contract
employees
the
best
wage,
allowances
and
benefits
package
in
the
region.
The
company
dismissed
500
workers
accused
of
causing
the
violence
and
re-­‐
opened
the
plant
on
21
August,
saying
it
would
produce
150
vehicles
on
the
first
day,
less
than
10%
of
its
capacity.
Analysts
said
that
the
shutdown
was
costing
the
company
1
billion
rupees
($18
million)
a
day
and
costing
the
company
market
share.

11. LEGAL
MARUTI
DISPUTE
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0
COMPANY
STATEMENT
ON
LOSS
Shinzo
Nakanishi,
managing
director
and
chief
executive
of
Maruti
Suzuki
India,
said
this
kind
of
violence
has
never
happened
in
Suzuki
Motor
Corp's
entire
global
operations
spread
across
Hungary,
Indonesia,
Spain,
Pakistan,
Thailand,
Malaysia,
China
and
the
Philippines.
Mr.
Nakanishi
went
to
each
victim
apologising
for
the
miseries
inflicted
on
them
by
fellow
workers,
and
in
press
interview
requested
the
central
and
Haryana
state
governments
to
help
stop
such
ghastly
violence
by
legislating
decisive
rules
to
restore
corporate
confidence
amid
emergence
of
this
new
'militant
workforce'
in
Indian
factories.
He
announced,
"we
are
going
to
de-­‐recognise
Maruti
Suzuki
Workers’
Union
and
dismiss
all
workers
named
in
connection
with
the
incident.
We
will
not
compromise
at
all
in
such
instances
of
barbaric,
unprovoked
violence."
He
also
announced
Maruti
plans
to
continue
manufacturing
in
Manesar,
that
Gujarat
was
an
expansion
opportunity
and
not
an
alternative
to
Manesar.

12. LEGAL
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1
CONCLUSION
Labour
disputes
are
endemic
in
the
auto
industry
of
India
and
have
affected
other
manufacturers.
India
has
strict
labour
laws,
but
their
application
is
widely
sidestepped
by
hiring
low-­‐wage
contract
workers.
Manesar
violence
adds
to
India's
recent
incidents
of
labour
disputes
turning
to
violence.
Analysts
claim
recent
incidents
like
Manesar
violence
suggest
a
need
for
urgent
reform
of
archaic
Indian
labour
laws,
the
rigid
rules
on
hiring
and
layoffs,
which
harm
the
formal
sector
and
discourage
investment
in
India.
Government
mandated
procedures
for
labour
dispute
resolution
are
currently
very
slow,
with
tens
of
thousands
of
cases
pending
for
years.
The
government
of
India
is
being
asked
to
recognise
that
incidents
such
as
Manesar
violence
indicate
a
structural
sickness,
which
must
be
solved
nationally.

13. LEGAL
MARUTI
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2