Labour Unrest Effect on Heros Shares

Labour is an important factor of production and a labour unrest leads to the

slowdown in the production of a company.
Due to slowdown in the production the shareholders expect a decrease in the future
earnings (in form of dividends etc). This leads them to sell the shares of the
company as the opportunity cost of holding the shares becomes high they can
invest their money in better stocks or others asset classes. This leads to a drop in
the companys shares.
For Hero Moto Corp there was a labour unrest during July-August, 2014. This led to a
fall in its shares during August despite a declaration of dividend. In September the
problems were resolved and strong sales of two-wheelers were recorded boosting
the share prices.

Similar trend was seen when there was labour unrest at the same Gurgaon plant as
the workers were demanding Rs 15000-18000 while the company was willing to
give only Rs 7000 of wage increase.

Similar trend was seen during the labour unrest in April 2006. The contractual
labours were demanding regularisation. The trough pointed by the arrow occurred
when the labour force went on strike. By end of April the issue was resolved
tripartite between government, labour force and management.