Maruti Suzuki shrs up as co to resume Manesar ops next week

Maruti Suzuki shares rose over 1% on Friday morning as the company's announcement that it will re-start its Manesar plant from Tuesday relieved investors.

RC Bhargava, chairman of India's largest passenger car maker had on Thursday evening announced that the Manesar plant, shut since July 18 after workers' violent protests left a general manager dead and nearly 100 supervisors, managers injured, will be re-started on Aug 21.

The plant will open amid a heavy security presence -- 500 rapid action force personnel, with 200 of them on the Manesar factory campus, security men to ensure employees' safe commute between home and office and Maruti will have 100 security guards of their own -- as it is giving  top priority on safety of its employees and doesn't want to take any chance after last month's unprecedented violence.

It has already sacked 500 workers in the wake of the violence. According to CNBC-TV18 sources, the company will pay a severance package to these 500 workers. The severance will be paid as per earlier Supreme Court order. The workers were discharged from service for violating good conduct code, the sources added.

300 workers will  open the weld and press shop on Tuesday and Maruti will initially make 150 cars a day and then gradually scale up production there.

However, CNBC-TV18 sources said initial assembly of cars is likely to be done at the Gurgaon plant, which has been operating normally..

The Manesar plant is very important for Maruti Suzuki as the Swift hatchback and DZire sedan, among the top selling models, are made there. There was already a waiting list of around 4 months for the diesel version of the two cars before the plant shutdown.

The company has already lost production of 1,700 units per day and revenue loss of over Rs 700 crore for July alone at Manesar, according to analysts. Some reports suggest that the revenue loss will increase to around Rs 2,000 crore by the time the plant re-opens.

In 2011 too the company had lost revenue of around Rs 2,500 crore after the company had to shut Manesar plant on several occasions due to workers' unrest. The loss of production at Manesar then became a gain for rival car makers. Several customers bought cars from Maruti's rivals as the plant shutdown led to huge waiting list for Swift and DZire. However, Maruti did manage to reverse the trend  following the launch of new models of Swift and DZire.

At 10:15 hrs, Maruti Suzuki shares were up 1.1% at Rs 1,185.55 on NSE. The stock is down over 4% since the workers' violence at the plant last month.

Also Read: Macquarie upgrades Maruti Suzuki to 'outperform'