MARUTI UDYOG LIMITED INDUSTRIAL UNRESTS

PRESENTED BY, 3 11 S M 1 0 O 8 - A R S H A D J A M I L 3 1 1 S M 1 0 1 7 - S U M A L I N N AYA K 3 1 1 S M 1 0 1 8 - A N I M E S H PAT I 3 1 1 S M 1 0 1 9 - M A D H AW I R A J A N 3 1 1 S M 1 0 2 2 - S O U M YA R N . S A H U

Company Profile
In 1981 MUL was incorporated as a joint venture of the Indian

government and Suzuki Motor Corporation . Initial plan was to make produce small fuel efficient cars. Most popular small car-Maruti 800 started in 1983, which stayed as main product even after 17 years of its launch. In 1997 the market share was 82%. Maruti launched all terrain vehicle-Gypsy in 1985, Maruti 1000 in 1990 and Zen in 1993, also had added Esteem, Alto, WagonR, Omni CNG cab. In 1986 the company started the exports of cars. MUL employees more than 5500 employees, among these 4500 are engaged in production at Gurgaon plant and the average of workforce was nearly 36 years.

 1981- MUL was incorporated.

1982 Stepped into a 50-50 JV with SMC of Japan.

1983 Maruti 800, a 796 cc, Indias first affordable car

was produced. 1984 Installed capacity reached 40,000 units. Omni, a 796 cc was in production. 1985 Launch of Maruti Gypsy 1986 Produced 100,000 vehicles (cumulative production). 1987 Exported first lot of 500 cars to Hungary. 1988 Installed capacity increased to 100,000 units. 1992 SMC increases its stake to 50 per cent.

1994 Produced the 1 millionth vehicle since the commencement of production. 1995 The installed capacity reached 200,000 units. 1996 Launch of 24-hour emergency on-road vehicle service. 1997 Produced the 2 millionth vehicle since the commencement of production. 1998 Launch of website as part of CRM initiatives. 2000 IDTR (Institute of Driving Training and Research) launched jointly with Delhi government to promote safe driving habits.

2001 Launch of customer information centers in Hyderabad, Bangalore, and Chennai. 2002 SMC increases its stake to 54.2 per cent. 2003 Production of 4 millionth vehicle. Listed on BSE and NSE after a public issue oversubscribed 10 times. 2004 Maruti closed the financial year 2003-04 with an annual sale of 472122 units, the highest ever since the company began operations 20 years ago.

Improvement of MUL
In 1998-99 the productivity went up to 70 cars per employee

from 25 cars per employee per year in 1988. SMC could bargain for 40% equity up from 26% in 1987,which further went up to 50%in 1992.

COMPETITIVE STRATEGY
As the largest manufacturer of India, MUL was exposed to

various competition in the late 1990s from the new entrants such as GM, Daewoo, Hyundai, Ford, Mitsubishi and Telco. Daewoo, Hyundai and Telco introduced small cars segments, so far the monopoly segment of MUL. MUL had an installed capacity of 3,20,000 units per year and had its plant located at Gurgaon one of the prime industrial belts of North India. The companys competitor Daewoo was located at Surajpur, nearly 75 km from Gurgaon, Hyundai Motors at Chennai and Telco at Pune, in Western India.

BUSINESS STRATEGY
Value for money at low cost Large volume for economies of scale Main focus was on indigenous components, usage varies from

more than 90% to 75% in different models. Network of ancillaries to meet the demand : 400 vendors Distance between the service centers(25 kms) on all the National Highways in 2001

INDUSTRIAL RELATIONS
The President of MUEU(Maruti Udyog Employees Union) had

excellent relations with Bhaskaraddu MUEU was not associated with any of the trade unions like AITUC,INTUC, HMS,CITU Abraham Mathew, was the General Secretary, known for his good relations with CPI, Shiv Sena and also with the Minister of Heavy Industries, Manohar Joshi Dinesh Kumar was the President of the union Asim Talukdar, a management graduate was the head of HRM at MUL, joined in 1999.

INDUSTRIAL CONFLICTS
MULs pay was more towards Talukdar but not

towards workers. Planning of imposing tough condition. Reduce work force. New incentive scheme was not satisfactory. Suspended 9 employees.

Managements decisions
1.

2.

3.

4.

Management was keen to reduce labor cost per car, which is Rs. 2690 per car at Maruti and Rs.1617 per car for Hyundai Management agreed to increase average cost to company per employee to Rs. 33767. T his would mean an extra burden of Rs. 600 million per annum MUL hired workers from some of its vendors. The company also called back nearly 1200 apprentices. These apprentices were paid Rs.5000 per month MUL called back about a dozen non-production who were sent to Suzukis facilities in Japan as part of a 120-strong contingent for training

Unions interest
1. 2. 3.

Union demanded withdrawal of the good conduct notice before negotiating on other issues Union asked for reinstatement of all the employees who were either suspended or removed Union asked for improved incentive scheme

Strike In Manesar(2011)
Strike period- 4th to 17th june 2011

Strike took place with out notification to

management. 2000 workers Incurred a loss of 6 billion. Started one month before the election of labor union and after announcement of setting up a new plant in Gujrat. Existing union- MARUTI SUZUKI KAMGAR union.

Contd. Manesar
Reason of the strike 3rd june- management forced all employees to sign in blank papers. Low wage, incentives cuts, few breaks. Temporary workers conformation. 8th june- other union joined(AITUC, CITU, INTUC, HMS, UTUC and other 10-15 companies). 250 workers left job due to mistreatment of management.

MARKET SHARE OF MUL(2000-2010) in thousands

2000-168(300)

2001-146(275)
2002-137(280) 2003-151(285) 2004-179(350) 2005-214(420) 2006-234(450) 2007-253(490)

2008-276(520)
2009-303(595) 2010-365(675)

LOWEST WAGE RATIO OF INDUSTRY

Wage bill as a % of Net Sales Maruti Udyog Limiteed 1.89 Tata Motors 5.54 Mahindra & Mahindra 6.71 Ashok Leyland 7.69

Strengths
High labor productivity Introducing new models One Stop Shop Low Cost Maintenance Advantage Driving School-Available in all major cities. Lady

trainer for lady customer. 2628 authorized service centers. Ownership at low price.

WEAKNESS
Changing customers preference

Faced many strikes for labor satisfaction

Stop in production and loss of many man-hours. Comparatively new to diesel cars.

Lack of experience with foreign market.

Opportunities
Increasing middle class income.

Population growth
Customers satisfaction Popularity.

Threats
Fuel price

Threats from Chinese cars manufacturers.

Competition of second hand cars.

Strategies to be adopted
Negotiation between employer and union leader.

Management control and equity control problems

should be solved. Incentive schemes should be revised every year as market demand is very dynamic. Should try to develop its own technology and enjoy its profit completely. Concentrate more on production.