The shuttered Manesar plant caused Maruti Suzuki a 15%-20% loss in profit, due to missed production.
India’s biggest auto maker reported in July profits down for the fourth straight quarter. The losses caused by the damage at the Manesar plant’s assembly line, paint shop and other facilities were estimated at about 525 crore.
Maruti, which is 54.2% owned by Japan’s Suzuki Motor, was forced to close the Manesar plant after a disciplinary incident led to the destruction of the facility, injuring of several executives and the killing of a manager. The facility manufactures the DZire sedan and the Swift hatchback, being able to offer 1,200-1,400 units daily, estimated at 75 crore.
“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.”
It’s been more than a year since Maruti has been affected by labor unrest at the Manesar facility and several strikes from last year cost the company a production loss of 83,000 cars, or Rs 2,500 crore.