Industrial Relations Project

Chapter1.0: INTRODUCTION AND OVERVIEW

1.1 Introduction: Company

Maruti Suzuki India Limited is a partial subsidiary of Suzuki Motor Corporation of Japan. It

is India's largest passenger car company, accounting for over 45% of the domestic car

market. The company offers a complete range of cars from entry level Maruti 800 and Alto,

to hatchback Ritz, A star, Swift, Wagon-R, Estillo and sedans D Zire, SX4 and Sports Utility

vehicle Grand Vitara.

Its manufacturing facilities are located at two facilities Gurgaon and Manesar. Maruti

Suzuki’s Gurgaon facility has an installed capacity of 350,000 units per annum. The Manesar

facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity of

100,000 units per year and a Diesel Engine plant with an annual capacity of 100,000 engines

and transmissions. Manesar and Gurgaon facilities have a combined capability to produce

over 700,000 units annually. The company's headquarter is located in New Delhi.

Industrial relations

Since its founding in 1983, Maruti Udyog Limited experienced few 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

Impact of Industrial Relation issues on production

Compiled by: Remya Mohan,Scholar MBA- 4th sem,ABS,Noida Page 1

http://en.wikipedia.org/wiki/Labour_in_India

http://en.wikipedia.org/wiki/United_Front_(India)

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.

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.

Vision and Core Values

Customer Obsession

Fast, Flexible & First Mover

Innovation & Creativity

Networking & Partnership



http://en.wikipedia.org/wiki/National_Democratic_Alliance_(India)

http://en.wikipedia.org/wiki/Slowdown

http://en.wikipedia.org/wiki/United_Front_(India)

Openness & Learning

Managing Director

Mr. Shinzo Nakanishi

1.2 Research Question

The research addresses a research question which is as follows:

1) Industrial relation issues in Maruti’s production department and also effect on vendor

relationship during and after strike.

1.3 Research Objectives

The objective is to visit Maruti Employees and vendors associated with Maruti for

understanding the industrial relations issues that was faced by them during and after the strike

that took place in Manesar Plant.

1.4 Scope of the study

The study covers 20 employees’ and 10 vendors of Maruti. The employees and vendors will

be interviewed through survey questionnaire to find out the impact of industrial relation

issues and the repercussions.



1.5 Benefits of study

This study enables the researcher to understand how to tackle various problems related to

Industrial relations and how to overcome the issues so as not to be repeated again.

1.6 Limitations of study

Not having enough time the sample size selected for the research was limited to 20

employees’ and 10 vendors of Maruti. The perception and interpretation of the data may not

be 100% free from errors as it also involves opinion based data from respondents.



Chapter 2.0 Review of Related Literature

2.1 a) Industry Analysis and Overview literature.

Labour strikes in automobile industry in India

Rico Auto Industries Ltd.: In 2009, several workers from the Indian auto industry went on a

strike after a worker at Rico, an Indian maker of gear and brake parts, died during a protest

staged by workers against management. The worker was beaten to death by people believed

to be associated with Rico.

Pricol Ltd.: In September 2009, angry workers killed Roy George, the human resources head

of the instrument panel maker, for freezing their salaries. Management and workers had been

at loggerheads for the previous two years. Police arrested 50 suspects.

Honda Motor Co.: In September 2009, workers tried to prevent trial runs of a new assembly

line by threatening company officials with shock absorbers and motorcycle parts. In a

separate incident in 2005, company workers clashed with police. Workers reportedly wanted

management to bring back suspended workers. Honda Motor Co. said some of the protesters

were not company workers.

Graziano Trasmissioni India Pvt. Ltd: In September 2008, nearly 200 workers killed

Kishore Chaudhary, the chief executive of Graziano Trasmissioni India Pvt. Ltd., a

manufacturing unit of Swiss high-tech group OC Oerlikon Corp.



http://articles.timesofindia.indiatimes.com/2008-09-23/delhi/27930491_1_india-unit-graziano-trasmissioni-commercial-production

http://www.guardian.co.uk/world/2005/jul/27/india.randeepramesh

http://articles.economictimes.indiatimes.com/2009-09-22/news/28421281_1_labour-unrest-labour-strife-roy-j-george

http://articles.economictimes.indiatimes.com/2009-09-22/news/28421281_1_labour-unrest-labour-strife-roy-j-george

http://online.wsj.com/article/SB125858061728954325.html



Hyundai Motor Co.: The Indian unit of the South Korean automaker had to stop production

at its Chennai plant after nearly 150 workers staged a protest to bring back 67 of 87 workers

who were sacked by the company in December 2009.

Some attribute the clashes to what may be companies’ insensitivity in dealing with their

workers. “I think the industries are rising and are unable to foresee what is happening at the

human level,” said clinical psychologist Aruna Broota.

But others see a loosely-organized, sometimes thuggish union movement as the chief culprit.

“The union functions in an ad hoc manner,” said Ritu Tripathi, assistant professor at the

Indian Institute of Management in Bangalore.

Honda Siel faces labour unrest

TNN Jul 26, 2003, 12.05pm IST

NEW DELHI: Honda's Indian arm Honda Siel Cars India is facing an industrial unrest with

its 400-strong workers at Surajpur plant (Greater Noida) are demanding a wage hike and

threatening to strike work from Monday. The workers, sources said, have already decided

against working overtime and are observing a go-slow, which has forced engineers and

officers from Honda's Indian production team to double up at the shop floor for rolling out

cars. Worker have given the management time till Saturday to meet their demands, failing

which they may resort to a strike. ''Production is already down by around 30-40 per cent

despite the managers and officers pitching in,''the sources added. However, company AGM

Neeraj Garg said, ''There are no problems with the production.'' Sources further said workers

were resorting to several tactics to get their demand met. ''Cars are being scratched and

dented at the shop floor. In some cases, nuts and bolts were not fixed properly. The quality




control team is working overtime now to properly check each and every car that is being

rolled out to ensure that no defective model slips through,'' they said. This unrest comes at a

time when Honda is trying to up its market share in India. The firm, which posted a pretax

profit of Rs 50 crore in the 2002-03 fiscal, is in the process of launching its imported SUV

CR-V and the new-look Accord. Besides, it has also lined up a new-look City for launch in

September this year. This is the second auto multinational based in Greater Noida to face

labour issues at its plant. Recently, around workers of the Daewoo Motor had resorted to

violence.

Gurgaon - Manesar belt no stranger to labour unrest

PTI Oct 21, 2009, 01.54pm IST

NEW DELHI: History keeps repeating in the Gurgaon - Manesar industrial belt, one of the

country's largest auto hubs, which once again witnessed labour unrest following the death of

a young worker at Rico Auto on Sunday.

The death of 26-year-old Ajit Yadav, a worker at auto component manufacturer Rico Auto, is

not the first instance of fatalities in labour unrest in Haryana's industrial hub.

The memories of violence of July 25, 2005, when over 150 people were injured in a clash

between police and agitating workers of Honda Motorcycle and Scooter India, still haunts the

belt that aspires to be a global auto hub.

Unfortunately for the Haryana, the history of labour unrest goes beyond 2005 and has not

even spared India's largest car maker Maruti Suzuki India (then Maruti Udyog Ltd) that

witnessed a three-month strike by workers in 2000.



http://economictimes.indiatimes.com/maruti-suzuki-india-ltd/stocks/companyid-11890.cms

If it is component maker Rico Auto Industries now, which is in the midst of a storm

following the death of a worker last Sunday, in the past even Maruti had to deal with deaths

of workers, albeit in different circumstances, during the workers' stir.

Trouble broke out in Maruti when around 150 employees were retrenched and another 2,200

were forced to opt for voluntary retirement in 2000. The focus, however, shifted when one of

the workers was found dead under mysterious circumstances near the company's plant and

another died in a nearby hospital when rushed from factory.

2.1 b) Background

Labour unrest at Maruti

A s M a r u t i ’ s s a l a r y s t r u c t u r e comparatively higher than most manufacturing

companies, due to this competition and dec l i ne i n p ro f i t , t he company cou ld no t

l i ve up t o t he expec t a t i ons o f t he employees. As a result worker unrest started to

grow in the company. In September 2000 the Maruti Udyog Employees Union went on an



http://economictimes.indiatimes.com/rico-auto-industries-ltd/stocks/companyid-13205.cms

indefinite strike if their demands were not met. The employees were demanding a

new incentive s cheme , improved pens ion s cheme , be t t e r work

env i ronmen t and f i l l i ng up o f supe rv i so ry vacanc i e s . Howeve r t he

managemen t r e fu sed t o a ccede t o t he se demands.

Production fell by around 40 % for a period of 3 months. During this period the

engineers at the managerial positions manned the assembly lines to ensure that

production does not stop completely. The top management of Maruti were under

some pressure to negotiate with the workers. However, the government decided not t o

i n t e r f e r e d i r ec t l y and t he managemen t i n s i s t ed t ha t t he worke r s s t op t he

agitation and agree to adhere to the code of conduct specified by them. The strike ended in

January 2001 with the union members agreeing to by the code of conduct. About half of

the employees (40) suspended/terminated during the c o u r s e o f t h e a g i t a t i o n

w e r e n o t t a k e n b a c k o n d u t y . T h u s t h e m a n a g e m e n t r e t a i ned t he

uppe r hand a f t e r t he s t r i ke ended and t he work cu l t u r e a t Maru t i

changed significantly after this.

Some of the changes which took place were as follows:

1. The sense of job security that the workers enjoyed at Maruti diminished. In

subsequen t yea r s a number o f non -pe r fo rmer s we re a sked t o op t f o r a

voluntary Retirement (VRS) and by introducing VRS, 1251 jobs were reduced.

2 .De - r ecogn i zed Maru t i Udyog Employees Un ion (MUEU) by

d i smi s s ing t he union members and the MUEU was not allowed to conduct a

single general body mee t i ng a f t e r t he l ockou t and r ecogn i zed new un ion



ca l l ed Maru t i Kamgar Un ion and i t was s e t up i n Decembe r 2000 w i th

28 member s .

3. The company started relying more on casual (contractual) labour to decrease

its costs.

4. The proportion of variable performance based pay out of the total increased

significantly.

The major reasons behind labour unrest:

In t he l a t e 90s , Maru t i had begun t o f e e l t he e f f ec t s o f competition

in automobile industry and this can be attributed as one of the reason for

attack on the workers.

With the change in management in mid- 1990s, when it became predominantly

Government controlled for a while, and the conflict between the Government and

Suzuki may have been the cause of unrest among employees.

When Management-Union talks broke down in September 2000, the workers’ start

agitation: black badges to start with, and later, hunger strikes, tool down

strikes etc.

The management introduced a scheme, where incentives paid would be dependent

upon the sales of the company both of cars and spare parts, which are not

accepted by the union because productivity incentive could not be

connected with car sales since that were not something the workers could

determine.



Introduction of SCANLON type i ncen t i ve s cheme . The un ion

demanded reinstatement of the original incentive scheme which had been in place

prior to 1995, according to which 65% of all savings in labour-cost above the norm

set (at 41.5 cars per worker per year) was to be distributed to workers as an incentive

bonus.

Death of three persons in October 2000.

Mandatory requirement of signing a ‘good conduct undertaking’.

Gurgaon: Maruti Suzuki Workers’ Strike

Maruti Suzuki to Lift the Lock-out at Manesar plantWith Safety & Security of Employees Assured

New Delhi, August 16th, 2012: Maruti Suzuki India Limited today announced that the lock-out at

its Manesar facility will be lifted on 21 Aug 2012.



http://socialism.in/index.php/gurgaon-maruti-suzuki-workers-strike/

Safety & Security Measures

The Company had declared a lock-out at the Manesar plant on 21 July 2012 following large scale

violence by workmen on 18th July 2012. In the violence a General Manager, Mr. Awanish Kumar

Dev, was burnt to death inside the plant facilities and 96 Supervisors and Managers were injured /

hospitalized. The Company had stated that it could only start production when the safety and

security of its managers, supervisors and workers could be ensured.

The police has arrested a number of workers, including the 12 Union leaders, and started legal

processes to bring the guilty to book. More arrests may follow the police investigations, which are

continuing.

The Company will work closely with the Government to ensure that those guilty of causing the

death of Mr. Awanish Dev and of perpetrating violence are brought to book.

The State government has decided to take a number of steps to enhance the security of MSIL

employees. These include: 1) Setting up a Rapid Action Force of 500 police personnel headed by

a senior police officer near the Manesar area. In each shift 100 of them will be in the Maruti

Suzuki Manesar factory. 2) 40 Personal Security Officers (PSOs) have been provided for the

safety of managers, supervisors, and where necessary the workers. 3) Security arrangements have

been made at the residences of the employees.

MSIL has created a special force of 100 security guards, including ex-servicemen, at its Manesar

Plant in addition to the existing security force, to enhance security.

We believe that these measures, and the continuing efforts of the Haryana government and its

police force, to investigate, arrest and prosecute the criminals involved in the violence on 18th



July, will create a safe environment for work to resume.

Maruti Suzuki is grateful to the local community for their consistent support and expects that

local leaders will play a very important part in the creation and maintenance of a safe working

environment.

Manpower

Maruti Suzuki is grateful to the local community for their consistent support and expects that

local leaders will play a very important part in the creation and maintenance of a safe working

environment.

Based on internal investigations, the Company has identified those workers who were involved in

the violence and in whom the Company has lost confidence. The Company has taken note of the

fact that only a few months back, following a mutually agreed Settlement, these workers had

signed a good conduct undertaking. These workers will not be taken back. This list of workers

includes the persons arrested by the police and who are likely to face criminal proceedings, and

are also in our list.

If in the course of our enquiries or police investigations, it appears that more workers were

involved in the violence, action will be taken against them as and when required.

In accordance with the declared policy to not employ contract workers provided by contractors,

on the direct production line, the Company has started the process of directly hiring them. The

schedule of recruitment has been communicated to all the existing contract workers through the

contract agencies and recruitment would start from September 2, 2012.

Re-start of Production



The re-start of Production at the Manesar Plant would be gradual and will be taken up in phases.

Maruti Suzuki statement on Manesar

Maruti Suzuki statement on Manesar

Manesar, July 19th, 2012: We are deeply disturbed by the mob violence and arson at our

Manesar Plant on Wednesday evening. Several executives, managers and supervisors were

brutally attacked and injured, and nearly 100 of them had to be hospitalised.

We have also lost Awanish Kumar Dev, General Manager (HR) at Manesar Plant, who was burnt

to death by the mob. Awanish was an outstanding professional and team member, compassionate,

soft spoken and deeply committed to cordial industrial relations. In the past year, he had been

instrumental in the Company taking far-reaching steps to enhance the well being and working

conditions of workers at the Manesar Plant.

We are still assessing the total damage to property and facilities from the acts of arson. What is

clear is that the office facilities have been burnt beyond repair, as have the main gate, security

office and the fire safety section.

Both our plants in the Manesar campus were, of course, closed on Thursday. We will shortly

announce our decision on the next steps with regard to resuming operations in these facilities. We

request our customers and partners to bear with us in this extraordinary situation.

The top management team visited the injured colleagues in the hospitals in Gurgaon where they

are admitted. Their experiences are shocking. A few of our colleagues remain serious. While the



rest are recovering from the physical injuries, it will take them a while to come out of the trauma.

The injured include two Japanese expatriates, including the plant manager of the Manesar Plant.

Sequence of the violence

The workers’ union was demanding reinstatement of a worker who had been suspended for

beating up a supervisor. While negotiations were on with the senior management, the first act of

violence by the mob was to forcibly shut the main gate and prevent managers from leaving the

premises after working hours.

Thereafter, armed with iron rods and door beams of cars, the mob spread out in groups in the

factory area and targeted supervisors, managers and executives. In simultaneous attacks in

different parts of the factory, the mob beat the managers on their head, legs and back, rendering

many of their victims bleeding and unconscious. They also ransacked offices, broke glass panes

and wantonly damaged property. Finally, they set the offices on fire.

After being terrorized, abused and attacked in this manner by the mob, recovery for the injured

will not be easy. We will ensure they continue to receive quality medical attention, and are

extending whatever support is possible to the families as well.

By any account, this is not an “industrial relations” problem in the nature of management-worker

differences over issues of wages or working conditions. Rather, it is an orchestrated act of mob

violence at a time when operations had been normal over the past many months.

Such acts of violence - pre planned, unprovoked and gruesome - have implications beyond one

company or region. They are negative trigger for existing companies and regions across the

country, as also for prospective investors and job seekers.

We are extending full cooperation to the police and government authorities in identifying the

guilty and taking suitable action.



Maruti Suzuki declares lock out at Manesar Plant

New Delhi, July 21st, 2012: Maruti Suzuki Manesar facility was rocked by labour violence on

July 18, 2012. A General Manager, Awanish Kumar Dev, was burnt to death by the mob of

workers inside the plant facilities. Nearly a hundred managers and supervisors sustained serious

and critical injuries and had to be hospitalised. The mobs also set fire to the office wing and the

main gate.

The management’s most important concern at this time is the safety and security of its

supervisory and management personnel. The management firmly believes that unless the causes

are identified and appropriate corrective action is in place it would be unsafe for supervisors and

managers to resume work.

Following the incidents of violence and arson at the Manesar facility, the Management believes

that if employees are asked to report for work at the facility, their lives will be endangered.

With this strong concern on the safety and security of the personnel, Maruti Suzuki today issued a

notice declaring a lock-out at the Company’s Manesar plant facility.

The Company wants to ensure that the injured continue to receive quality medical care and

recover from the mental trauma caused by the violence. About 30 managers and executives are

currently admitted in hospitals in Gurgaon. Even among those discharged from hospital, many are

going through trauma owing to the terror and abuse accompanying the attacks. The families of

these victims remain disturbed.

The Company’s other facilities, including the operations in Gurgaon, will continue to function

normally.

Manesar plant lockout may cost Maruti 20% decline in profit



NEW DELHI: Maruti Suzuki faces a 15 per cent-20 per cent dent in profit due to missed

production at its shuttered Manesar plant, portending more trouble for the country's biggest

carmaker whose profits slumped for the fourth straight quarter last month.

Analysts say this estimate is based on the output loss in the fortnight since the lockout. The

losses due to damage to Maruti's assembly line, paint shop and other facilities at its key

Haryana plant are pegged at 525 crore. Maruti, 54.2 per cent owned by Japan's Suzuki Motor,

shut its Manesar unit last month after disgruntled workers rampaged through the plant

following a disciplinary incident. A manager was killed and several executives were injured

in the violence.

The lockout at the Manesar plant, which produces the high-profit Swift hatchback and DZire

sedan, is resulting in a daily production loss of 1,200-1,400 cars, or Rs 75 crore, the carmaker

said last month.

"We expected the output losses to have a direct impact on the company's profitability," said

Mahantesh Sabarad, senior vice-president of equity research at Fortune Financial Services.

"Even a two-week closure at the Manesar plant could impact its profits margins in the range

of 2 per cent for the quarter. Higher costs coming from rising security and manpower

expenditure will have an added impact," Sabarad added.

Maruti, however, said it is yet to work out the financial implication of the problem at its

Manesar plant. "We are still assessing the total damage to property and facilities from the acts

of arson," a spokesperson for the company said.



http://economictimes.indiatimes.com/topic/Manesar%20plant

http://economictimes.indiatimes.com/fortune-financial-services-india-ltd/stocks/companyid-8109.cms

http://www.zigwheels.com/newcars/Maruti-Suzuki

Another analyst seconded the warning on profit. "Maruti may struggle to reach last year's

sales of a million units in the domestic market," said Abdul Majeed, partner auto practice at

PricewaterhouseCoopers. "Going by the reports, the initial impression is that it could see

single-digit decline in sales on the back of uncertain production, at least in the months of July

and August," Majeed added.

The comments follow Maruti's announcement last week that first-quarter profit had dipped 23

per cent. The company is already under pressure to dole out higher discounts as sales of its

petrol models have stagnated.

Maruti has been plagued by labour unrest at its Manesar plant for over a year now. A series

of workers' strikes last year at the plant led to a production loss of 83,000 cars, or Rs 2,500

crore in revenue loss. IHS Global Insight, a consultancy, said a month-long lockout could

mean a production loss of 40,000 to 60,000 units, or over Rs 2,000 crore in revenue.The

consultancy said that despite strong brand equity, the unrest at Maruti could see customers

switching loyalty. "Maruti will gain from its strong brand equity, but still 40 per cent of

customers are expected to shift loyalties and buy other cars," said Deepesh Rathore, IHS

Global's managing director for India. He said Ford, Volkswagen, Toyota and Nissan are

expected to cash in on Maruti's woes, but the carmaker will not suffer any major loss in

market share, as its popular Swift and DZire models are likely to shore up sales once

production restarts at Manesar.

The combined order backlog for popular Swift hatchback and DZire sedan is currently

125,000, Maruti's managing executive officer (marketing & sales) Mayank Pareek said. Both

models are produced at the Manesar plant.



http://www.zigwheels.com/newcars/Nissan

http://economictimes.indiatimes.com/topic/Global%20Insight

Besides production loss, Maruti has witnessed a jump in manpower costs in recent years. In

the quarter to March, manpower costs rose 23 per cent to Rs 256 crore. It was up 20 per cent

for the full fiscal at Rs 844 crore.

As part of its effort to reduce labour unrest, the carmaker is considering having a permanent

workforce, which is expected to bloat its wage bill substantially. The company employs 30

per cent-40 per cent of its workforce on contractual terms. The newer Manesar plant has a

higher number at 50 per cent-55 per cent.

The Manesar lockout is expected to impact parent Suzuki Motor's global earnings. "Our

current forecast was fairly conservative to begin with, but whether we will need to revise will

depend on the situation at Manesar," Suzuki Motor executive vice-president Toshihiro Suzuki

said in Japan on Thursday. "For every day that production is suspended, the retail revenue at

Maruti is reduced by about 1 billion yen," Suzuki added.



http://economictimes.indiatimes.com/topic/Suzuki%20Motor

Maruti’s vendors to face the heat of production cuts

The lockout at Maruti Suzuki India Ltd’s Manesar factory has made component suppliers

nervous. With no solution in sight nearly a fortnight after the lockout was declared, Maruti’s

suppliers concede that it will affect their production schedules. This, in turn, will hit their

revenue streams, cash accruals and profitability.

The worst hit will be tier-I suppliers to Maruti, especially those with greater dependence on

its Manesar facility. The unit, which makes models such as the Swift, DZire, SX4 and A-star,

accounts for around one-third of the car maker’s total production volumes. A report by rating

agency Icra Ltd, which puts 14 vendors on “rating watch with developing implications”,

explains that the overall average realization of components related to these four models is

higher than those of the components that go into the models produced at Maruti’s Gurgaon

(Haryana) plant.

A parallel can be found in the period of labour unrest that disrupted about 72 days of

production in 2011 and translated into a potential sales loss of 40,000 vehicles in fiscal 2012.

At the time, the effect on large vendors was clearly mirrored in their profit and loss account.

For instance, Jay Bharat Maruti Ltd, which is among Maruti’s largest component joint

ventures, posted a 7.5% and an 11.5% year-on-year dip in revenue in the September and

December quarters, respectively. Net profit nosedived 86% in each of these quarters. Sona

Koyo Steering Systems Ltd, too, saw a contraction in revenue and profit around the period.

Other listed entities affected include Lumax Industries Ltd, Subros Ltd and Halonix Ltd

(formerly called Phoenix Lamps Ltd). Of course, high raw material costs and the rupee

depreciation worsened the situation. Media reports indicate that this time around, the lockout

and the production shutdown will hit about 600 units that are a part of Maruti’s supply chain,



http://www.livemint.com/Search/Link/Keyword/Halonix%20Ltd

http://www.livemint.com/Search/Link/Keyword/Subros%20Ltd

http://www.livemint.com/Search/Link/Keyword/Lumax%20Industries%20Ltd

http://www.livemint.com/Search/Link/Keyword/Sona%20Koyo%20Steering%20Systems%20Ltd

http://www.livemint.com/Search/Link/Keyword/Sona%20Koyo%20Steering%20Systems%20Ltd

http://www.livemint.com/Search/Link/Keyword/Jay%20Bharat%20Maruti%20Ltd

http://www.livemint.com/Search/Link/Keyword/A-star

http://www.livemint.com/Search/Link/Keyword/SX4

http://www.livemint.com/Search/Link/Keyword/DZire

http://www.livemint.com/Search/Link/Keyword/Swift

http://www.livemint.com/Search/Link/Keyword/Maruti%20Suzuki

given that the company is the country’s largest car maker with a 39% market share in

passenger vehicles. Worse, it coincides with sluggish growth in the business.

The production cutback will hit cash accruals of vendors. With most of them working on thin

margins in original equipment supplies, lower cash accruals could see component makers

struggle to cover variable costs.

Even otherwise, the interest cover (the number of times the profit covers interest expense) of

auto component makers with a large exposure to original equipment is relatively low.

Analysts say that if the lockout is prolonged, it would hit operating leverage, too, given that

most component makers had ramped up capacities in the last two years.

In spite of these adversities, Maruti vendors are unlikely to switch loyalties as it remains the

undisputed market leader, which guarantees strong volumes to vendors in normal times.

That said, auto component firms with a diversified customer base or geographic spread would

be better off. For instance, battery and tyre makers have nearly 65-70% of their revenue

accruals from the replacement market, with better profit margins in that segment, too. Some,

such as Motherson Sumi Systems Ltd, although a large supplier to Maruti, will see less

impact on its profitability because a little over three-fourths of its revenue comes from its

overseas operations.



http://www.livemint.com/Search/Link/Keyword/Motherson%20Sumi%20Systems%20Ltd

Chapter 3.0 Research Design and methods

3.1 Research Design

“A research design is the arrangement of conditions for collection and analysis of

data in a manner that aims to combine relevance to the research purpose with economy in

procedure.” (CR Kothari, 2009)

The research design is the master plan specifying the methods and procedures for collecting

and analysing the needed information. A research design encompasses the methodology and

procedure employed to conduct scientific research. The design of a study defines the study

type (descriptive, correlation, semi-experimental, experimental, review, meta-analytic) and



http://en.wikipedia.org/wiki/Research

sub-type (e.g.: descriptive-longitudinal case study), research question and hypotheses,

independent and dependent variables, experimental design if applicable, data collection

methods and a statistical analysis plan.

Different type of Research designs

Exploratory research

Exploratory research is the type of research in which the research is conducted for the

problem that has not been clearly defined. This type of study is conducted for formulating a

problem for more precise investigation. This method is applicable.

Descriptive research

Descriptive research includes surveys and fact finding enquiries of different kinds.

The major purpose of descriptive research is description of the state of affairs as it

exists at present. The main characteristic of this method is that the researcher has no

control over the variables, he can only report what has happened or what is

happening. (C R Kothari, 2009) .This method is not applicable.

Analytical Research

In this type of research the researcher has to use facts or information already

available, and analyze these to make a critical evaluation of the material.

Historical Research

Historical research is that which utilizes historical sources like documents, remains,

etc. to study events or ideas of the past, including the philosophy of persons and

groups at any remote point of time. Research can also be classified as conclusion-

oriented and decision-oriented. While doing conclusion oriented research, a

researcher is free to pick up a problem, redesign the enquiry as he proceeds and is



http://en.wikipedia.org/wiki/Design_of_experiments

http://en.wikipedia.org/wiki/Dependent_and_independent_variables

http://en.wikipedia.org/wiki/Hypothesis

http://en.wikipedia.org/wiki/Research_question

http://en.wikipedia.org/wiki/Case_study

prepared to conceptualize as he wishes. Decision-oriented research is always for the

need of a decision maker and the researcher in this case is not free to embark upon

research according to his own inclination. Operations research is an example of

decision oriented research since it is a scientific method of providing executive

departments with a quantitative basis for decisions regarding operations under their

control.

Empirical Research

This research relies on experience or observation alone, often without due regard for

system and theory. It is data-based research, coming up with conclusions which are

capable of being verified by observation or experiment. We can also call it as

experimental type of research. In such a research it is necessary to get at facts

firsthand, at their source, and actively to go about doing certain things to stimulate the

production of desired information. In such a research, the researcher must first

provide himself with a working hypothesis or guess as to the probable results.

Researcher then works to get enough facts (data) to prove or disprove his hypothesis.

He then sets up experimental designs which he thinks will manipulate the persons or

the materials concerned so as to bring forth the desired information. Such research is

thus characterised by the experimenter’s control over the variables under study and

his deliberate manipulation of one of them to study its effects. Empirical research is

appropriate when proof is sought that certain variables affect other variables in some

way. Evidence gathered through experiments or empirical studies is today considered

to be the most powerful support possible for a given hypothesis.

3.2 Data Collection methods



Collection of data is the most prominent part of any survey. As soon as the research

question is created the data collection begins. There are two methods of collecting

data i.e. Primary data and secondary data.

3.2 a) Primary data

The primary data are those which are collected afresh and for the first time, and thus

happen to be original in character. (C. R. Kothari, 2009)

The following are the methods of collecting primary data

Questionnaire Method

A questionnaire consists of a number of questions printed or typed in a definite order

on a form or set of forms.(C.R.Kothari,2009).

A questionnaire is a set of systematically structured questions used by a researcher to

get needed information from respondents. Questionnaires have been termed

differently, including surveys, schedules, indexes/indicators, profiles, studies,

opinionnaires, batteries, tests, checklists, scales, inventories, forms, inter alia. They

are

…any written instruments that present respondents with a series of

questions or statements to which they are to react either by writing out

their answers or selecting from among existing answers. (Brown 6)

Three types of data about a respondent may be accessed by use of questionnaire

instrument. Factual questions: These include demographic information, socio-

economic status, education, etc.



Behavioural questions: deals with both past and present deeds of the respondent;

Attitudinal questions: comprises of world views. It covers people's opinions, attitudes,

beliefs and values.

Interview Method

The interview method of collecting data involves presentation of oral-verbal stimuli

and reply in terms of oral-verbal responses. (C.R.Kothari , 2009)

Interview is verbal questioning. In research, Lindzey Gardner has defined interview as

“a two-person conversation, initiated by the interviewer for the specific purpose of

obtaining research-relevant information and focused by him on the content specified

by the research objectives of description and explanation”.

The researchers in this project has surveyed through Questionnaire method as well as

Interview Method.

Questionnaire was designed in such a manner that could help the researcher to arrive

at a conclusion that, what were the impact of industrial relation issues on production

as well as the issues that vendors of Maruti Suzuki India Limited and their supply

chain.

20 surveys of Employees and 10 surveys of vendors have been done through personal

interview method.

3.2 b) Secondary data

The secondary data, on the other hand, are those which have already been collected by

someone else and which have already been passed through the statistical process.

(C.R.Kothari,2009).



Secondary data is the data that have been already collected by and readily available

from other sources. Such data are cheaper and more quickly obtainable than the

primary data and also may be available when primary data cannot be obtained at all.

The importance of secondary data cannot be ignored in a survey based research.

Secondary data can be less valid but its importance is still there. Sometimes it is

difficult to obtain primary data; in these cases getting information from secondary

sources is easier and possible. Sometimes primary data does not exist in such situation

one has to confine the research on secondary data.

Sometimes primary data is present but the respondents are not willing to reveal it in

such case too secondary data can suffice: for example, if the research is on the

psychology of transsexuals first it is difficult to find out transsexuals and second they

may not be willing to give information you want for your research, so you can collect

data from books or other published sources.

Hence, this study also relies on secondary to show many other aspects of the

survey.

3.3 SAMPLE DESIGN

A sample design is a definite plan for obtaining a sample from a given population. It

refers to the technique or the procedure the researcher would adopt in selecting items

for the sample. (C.R.Kothari, 2009)

3.3 a) Types of Sample design

Non-probability sampling

Non-probability sampling is that sampling procedure which does not afford any basis

for estimating the probability that each item in the population has of being included in

the sample. (C.R.Kothari, 2009)

Types of Non Probability Sampling

Purposive Sampling or Judgemental sampling



Snowball Sampling

Quota Sampling

Dimensional Sampling

Convenient sampling

Accidental, Haphazard or Convenience Sampling

In this type of sampling the sampling units that are convenient to the researchers are

contacted. The researchers have used this type of sampling method.

Chapter 4.0 : DATA ANALYSIS AND PRESENTATION

4.1 Data Analysis

Data Analysis is about summarising the data collected via questionnaires into a

simple format so that the research question can be answered.

Analysis of data is a process of inspecting, cleaning, transforming, and modelling data

with the goal of highlighting useful information, suggesting conclusions, and supporting

decision making. Data analysis has multiple facets and approaches, encompassing

diverse techniques under a variety of names, in different business, science, and social

science domains.

An analysis is given below by the researchers on the data obtained during the

questionnaire survey. Each question from the questionnaire is taken and its responses are



http://en.wikipedia.org/wiki/Information

http://en.wikipedia.org/wiki/Data

carefully tabulated, based on which a graph a prepared, supported by explanation and

analysis for the same.

1. a Data analysis on survey for vendors

Question1: Years you have been associated with Maruti?

Less than 5 years 5-10 years 10-15 years 15-20 years 20-25 years

Years have you been associated with Maruti 2 5 2 1 0

Source: Survey Questionnaire



Researcher found out that most of the vendors are associated with Maruti for over 5-10 years

and they all are happily associated with Maruti and are planning to continue their services

with Maruti. Hence, it can be concluded that Maruti has managed to maintain its relationship

with vendors and the vendors are also ready to standby Maruti in tough times.

Question2: Do you supply to any other company automobile manufacturer?

Yes NoDo you supply to any other company automobile manufacturer 80% 20%




80% of the vendors supply to other companies also like Delphi supplies to Tata and Nissan ,

Amtek supplies to Ford ,Hyundai etc while Sunbeam supplies only to Maruti. In terms of

revenue, Maruti vendors will not be affected too much as most of them are not dependent

solely on Maruti even though business from Maruti forms a major chunk of their sales.

Question3: What were the challenges that you faced during the recent strike?

Answer3: The researcher found out that vendors faced many challenges during the recent

strike like there were material hold ups and suffered loss of Rs 30 lakh daily. Some of the

employees lost their job as a part of cost cutting measures.



Question4: Was there a major decrease in the supply of components with respect to

quantity?

If yes, provide an approximate percentage of decrease and time period (in months)?

Answer 4: Yes there was a major decrease in the supply of components with respect to

quantity, almost between 50-60% there was decrease in supply. For the strike to have

occurred just after the new Swift was launched. Without a doubt, it has put off many

prospective buyers; people have cancelled or withdrawn their bookings, and worse, bought a

car manufactured by another car maker altogether. This has hurt not just the new Swift, but

Maruti as a whole. In turn the components supply by vendors also got affected.

Question5: Did you at any point of time during the stretched out strike feel that this Industrial

Relations issue will drag further and revenue losses will be too high to bear?

yes To some extent No



Did you at any point of time during the stretched out strike feel that this Industrial Relations issue will drag further and revenue losses will be too high to bear? 6 4 0


Respondents told researcher that due to strike, inventory was rising, plants were underused

and they have lost almost around Rs 1,400 crore, or 15-20% of their revenue, since the first

strike at Maruti's Manesar plant in June. They were daily in hope that the strike will come to

an end but it was dragging further and at a point they thought that now loses are unbearable

but the management was very supportive and helped them to cover up a part loss . Even

during times of their own loss Maruti’s management has helped its vendors sail through the

tough period.



Question6: Did you receive any kind of support from Maruti during the strike period ?

Yes NoDid you receive any kind of support from Maruti during the strike period 8 2


Researcher tried to find out whether Maruti was supportive towards their vendors during the

strike and where they trying to withhold their vendors and the researcher got to know that the

meetings were held by the management and they were very cooperative and told them that

they will help the vendors in any manner.

Question7: Post strike has the things come under control and business back to normal?

Yes Yes to pick up Not fully No

Post strike has the things come under 5 5



control and business back to normal

Source : Survey Questionnaire

Post strike the things have not come under control fully, but, yes, it has been picking up

recently. Since there is recession prevailing the automobile sector is highly affected with this

recession and it is not only Maruti but every automobile organization is facing challenge to

sell their car. Since the recent strike yes the sales graph of Maruti was affected and as it was

about to come to normal production and sales, however the recession has worsened the

situation.

Question 8: Any other point or comments?

The respondents did not reply to this question.

4.1. b Data analysis on survey for employees

Question1: Total years of experience?


more than 25 years

Total years 0 2 0 10 6 2



of experience


Most of the respondents have 15-20 years of total experience.

Question2: Years you have been employed with Maruti?


more than 25 years

Years have you been employed with Maruti 5 0 0 8 5 2




Most of the respondents are associated with Maruti for 15-20 years and they are those who

have been shifted to manesar plant from main Gurgaon plant.

Question3: Was it possible that the strike could have been avoided?

Yes Not exactly NoWas it possible that the strike could have been avoided 15 5 0




From the above figure we can make out that most of the respondents said that is was possible

that the strike could have been avoided.Some of the respondents mentioned that the vigilance

team of manesar plant was a total failure as they could not make out that a problem was

creeping in employees and also that if the proper planning was done then this strike could

have been avoided. Even some of then told the researcher that the recuitment strategy was

inadequate as they did not do IJP and also the HR team hired the employees from a particular

belt and of same age group. They should have ideally mixed up the employees who have

experience and are trained to work in extreme conditions.



Question4: What was the effect of strike on production process?

Answer4: Researcher found out that as a part of strike there were certain effects on

production process such as:

1. Volume of production was less

2. There were lots of problems as the production process was not smooth due to less

employees and also that the production of Swift had to be shifted from Manesar plant to

Gurgaon plant on a temporary basis so that the consumers were not affected.

3. Market share decreased

4. Badly affected vendors/vendor employees

5. Plant equipment damaged by striking employees

6. Expenditure rises for transportation.

7. Company forced to declare a layoff.

8. Many vital information lost by damaged ITD cables/PCUs.

Question 5: Were the vendors supportive during and after the strike?

Yes No

Were the vendors supportive during and after the strike 16 4




Among 20 respondents 16 respondents told researcher that yes the vendors were supportive

during and after the strike, while only 4 respondents said that the vendors were not

supportive.

Question 6: What were the various measures taken by the management post-strike to speed up the production process?

Answer6: Researcher tried to find out the various measures taken by management post-strike

to speed up the production process and they are as follows:

1. Market favourite models shifted to main plant.

2. Segregation of manpower and identify the trouble makers.

3. Training given to employees at all levels to handle stress as well as to keep the motivation

level high.

4. Transfer of manpower from main plant to Manesar.

5. All damaged systems/robots reinstalled.



6. Regular meetings with recognised union.

7. Implemented a good wage revision package

8. A committee formed for workers concern – including their representation.

9. Proper tie up with Government agencies.

10. Taking more emphasis on employee management relations.

11. New recruitment policies.

12. No Contractual manpower in direct production line.

Question 7: Do you think the management could have solved the Industrial Relations issues faster and resumed production earlier?

Yes No

Do you think the management could have solved the Industrial Relations issue faster and resumed production earlier? 11 9




Researcher found out that it was almost a 50 – 50 case that the management could have or

could not have solved the industrial relations issue and resumed the production earlier. Some

of the respondents said that, yes, the issues could have been sort out earlier and the

production could have resumed if the Management would have taken adequate steps to figure

out the exact problem, while some respondents told the researcher that the strike was not in

anyone’s hand and nothing could have been done to solve the issue.

Question 8: Any other point or comments?

The respondents did not reply to this question.



Chapter 5.0: Conclusion and Recommendations

5.1 Findings

The 13-day strike of workers at the Maruti Suzuki factory at Manesar (Gurgaon) finally

concluded with a significant victory of the workers this June. The management was forced to

reinstate the 11 workers who had been sacked for agitating for the right to form a union of

their choice.

The existing union in Maruti was the management-approved Maruti Udyog Kamgar Union

(MUKU). Workers had asserted that this union was not protecting their interests, and had

formed a new union – the Maruti Suzuki Employees Union (MSEU). The management had

refused to recognise or negotiate with this union, insisting that only the MUKU would be

allowed to function. The Maruti workers’ demand for their legally mandated right to a union

of their choice struck a chord with the working class all over the country. The fact that

workers were sacked for raising this basic demand highlights the fact that in factories in

India, the bare minimum of industrial democracy is suppressed in order to maintain

exploitative conditions. After the agreement and the end the strike, the struggle for a union

separate from the management-approved one will continue.

The Haryana CM in a meeting with the Director General and CEO of Maruti declared that he

would disallow the formation of any union except the one approved by the management.

Such a declaration is in itself an open violation of the statutory and legally mandated right of

workers to form unions of their own choice. That an elected CM should thus openly endorse



the violation of the law of the land and the rights of workers by corporations is a comment on

the prevailing ruling class hostility towards workers’ rights.

Workers in automobile units like Maruti Suzuki earn significantly higher wages than other

sections of workers. Their sustained strike for nearly two weeks (withstanding threats,

intimidation, cutting off of electricity and water) sends a strong message that the question of

workers’ dignity, rights to unionise, and industrial democracy are central to workers’ lives

and aspirations.

This is not the first time workers at automobile units in Gurgaon have waged struggles for the

right to form a union. Maruti workers themselves have had to wage a similar struggle a

decade ago, Honda workers faced severe police brutality in the course of a similar struggle,

and in 2009, the entire Gurgaon-Manesar belt witnessed a historic strike raising basic issues

of industrial democracy. But this fundamental right of workers is routinely denied in all

factories and industrial clusters all over the country.

Denial of workers’ right to form unions and conduct protest actions is a symptom of a serious

erosion of democracy and assault on rights. And this assault is being conducted by

governments in order to appease corporate power and give corporations a free hand to violate

laws and exploit workers.

The re was l a ck o f Co l l e c t i ve Ba rga in ing and t he absence o f conv inc ing

r e sponse f rom the managemen t .

The workers lacked the work ethics. Unlike the Japanese and Korean workers, Indian

worke r s d id no t c a r e abou t t he impac t o f t he i r ag i t a t i on on t he v i ab i l i t y



of t he company and the attitude of customers. Indian management also seem to

have failed fully grasp and internalize the Japanese Management. I t wou ld be i n

eve rybody’ s i n t e r e s t i f t he managemen t we re more s ens i t i ve t o labour and

labour was equally concerned about the product market development.

5.2 Recommendations

Maruti should learn how to deal with young workers to avoid strike in future. The average

age of the Manesar plant workers is roughly about 24-25 years. Perhaps, the emphasis should

be on imparting more education to workers how to adapt to the working environment and

give respect to the laws. It is a question of how you create an environment and how you adapt

to it. It is a two-way process."



BIBLIOGRAPHY

http://www.marutisuzuki.com/ , “about us” and logo, original website of Maruti India,

retrieved on 27th January 2013.

http://www.marutisuzuki.com/corporate.aspx , “corporate”, original website of Maruti

India, retrieved on 28th January 2013.

http://www.marutisuzuki.com/MarutiSuzuki_error%20Page.html?aspxerrorpath=/

vision-and-core-values.aspx , “vision and core values”, original website of Maruti

India, retrieved on 28th January 2013.

“Research Design”, Page No 21, Research Methodology. Methods and Techniques

(Second revised edition) 2009, C. R. Kothari, 28th January 2013.

“Methods of Data collection”, Page No 95, Research Methodology. Methods and

Techniques (Second revised edition) 2009, C. R. Kothari, 29th January 2013.

“Sampling Design”, Page No 55, Research Methodology. Methods and Techniques

(Second revised edition) 2009, C. R. Kothari, 29th January 2013.

http://www.team-bhp.com/forum/indian-car-scene/98577-strikes-indian-automobile- companies.html , “strike in automobile sector” retrieved on 29th January 2013.

http://onganya.blogspot.in/2010/03/questionnaire-as-data-collection.html , “ Data Collection method” retrieved on 30th January 2013.

http://www.ianswer4u.com/2012/02/primary-research-advantage

and.html#ixzz2B6ioqOwT , “Primary data research” retrieved on 30th January 2013.

http://www.worldbank.org/poverty/impact/methods/datacoll.htm , “data collection

methods” retrieved on 2nd February 2013.



http://www.ianswer4u.com/2012/02/primary-research-advantage

http://onganya.blogspot.in/2010/03/questionnaire-as-data-collection.html

http://www.team-bhp.com/forum/indian-car-scene/98577-strikes-indian-automobile-companies.html

http://www.team-bhp.com/forum/indian-car-scene/98577-strikes-indian-automobile-companies.html

http://www.marutisuzuki.com/MarutiSuzuki_error%20Page.html?aspxerrorpath=/vision-and-core-values.aspx

http://www.marutisuzuki.com/MarutiSuzuki_error%20Page.html?aspxerrorpath=/vision-and-core-values.aspx

http://www.marutisuzuki.com/corporate.aspx

http://www.marutisuzuki.com/

http://articles.economictimes.indiatimes.com/2012-08 07/news/33083609_1_manesar- plant-japan-s-suzuki-motor-dzire, “manesar strike details” retrieved on 2nd February 2013.



http://articles.economictimes.indiatimes.com/2012-08%2007/news/33083609_1_manesar-plant-japan-s-suzuki-motor-dzire

http://articles.economictimes.indiatimes.com/2012-08%2007/news/33083609_1_manesar-plant-japan-s-suzuki-motor-dzire

Appendix Survey Questions

Vendor Survey Questionnaire

"Impact of Industrial Relation issues at MUL on vendors and supply chain"

The data collected through the survey will be kept strictly confidential and will only be utilised for academic purposes. The data will be presented in the form of analysis and no individual’s name will be mentioned in the research report to maintain confidentiality.

Contact Person: _________________________________________________________________

Designation____________________________________________________________________

Name of Company : ____________________________________________________________

1. How many years have you been associated with Maruti?

a) Less than 5 years

b) 5-10 years c) 10-15 years d) 15-20 years

e) 20-25 years

2. Do you supply to any other company automobile manufacturer?

a) Yes

b) No



3. What were the challenges that you faced during the recent strike?

a) _______________________________________________________

________________________________________________________

b) _______________________________________________________

________________________________________________________

c) ________________________________________________________

________________________________________________________

4. Was there a major decrease in the supply of components with respect to

quantity?

If yes, provide an approximate percentage of decrease and time period (in

months)?

_____________________________________________________________________



5. Did you at any point of time during the stretched out strike feel that this

Industrial Relations issue will drag further and revenue losses will be too

high to bear?

a) Yes

b) To some extent

c) No

6. Did you receive any kind of support from Maruti during the strike period ?

a) Yes

b) No

If Yes, elaborate _______________________________________________________

_____________________________________________________________________

____________________________________________________________________

7. Post strike has the things come under control and business back to normal?

a) Yes

b) Yet to pick up

c) Not fully

d) No



8. Any other point or comments?



Employee Survey Questionnaire

"Impact of Industrial Relation issues on production"

The data collected through the survey will be kept strictly confidential and will only be utilised for academic purposes. The data will be presented in the form of analysis and no individual’s name will be mentioned in the research report to maintain confidentiality.

Contact Person: _________________________________________________________________

Designation: __________________________________ Location: ________________________

1. Your total years of experience?


b) 5-10 years

c) 10-15 years

d) 15-20 years

e) 20-25 years

f) more than 25 years

2. How many years have you been employed with Maruti?


b) 5-10 years

c) 10-15 years

d) 15-20 years

e) 20-25 years



f) more than 25 years

3. Was it possible that the strike could have been avoided?

a) Yes

b) Not exactly

c) No

4. What was the effect of strike on production process?

a)

b)

c)

5. Were the vendors supportive during and after the strike?

a) Yes

b) No

6. What were the various measures taken by the management post-strike to speed up the production process?

a)

b)

c)

7. Do you think the management could have solved the Industrial Relations issue



faster and resumed production earlier?

a)Yes

b) No

8. Any other point or comments?



Documents

Industrial Relations Project