Maruti Suzuki to stop using contract workers in direct manufacturing image

Maruti Suzuki faces months of supply woes and has announced that it will stop using contract workers in direct manufacturing after the Manesar unrest.

The company tries to find solutions to labor problems that culminated in the death of a HR manager last week.

“By March 2013, we won’t have any contract workers in our direct manufacturing processes,” S.Y. Siddiqui, Maruti’s chief operating officer for administration said.

The shutdown of the factory, which suppliers and analysts expect to last at least a month at a daily cost of $15 million in lost production, is likely to hobble operations for months to come.

According to an estimate by securities firm Karvy, a lockout beyond two months could shave as much as Rs 110 crore off Maruti’s net profit every subsequent month. Maruti Suzuki reported net profit of Rs 1,635 crore for the year ended March 2012.

The police have arrested over 100 workers following the incident. Ninety one of those arrested on the night of incident are in fourteen days’ judicial custody.

The state government and the company are separately investigating the incident.