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BUSINESS:
MARUTI UDYOG
Killing
the Golden Goose
A strike
at India's biggest carmaker punctures its plans to retain primacy and
retrieve the ground lost to competitors in recent times
By Sumit
Mitra
A
red flag fluttering at a factory gate is hardly an unfamiliar sight in
Gurgaon on the Haryana-Delhi border, dotted with start-ups that soon become
non-starters. What is unusual about the month-long labour agitation at
Maruti Udyog Limited (MUL), however, is that it is happening in the country's
leading carmaker and an organisation regarded as one of the best paymasters
in the automobile industry. The other surprising aspect of the workers'
boycott-over 5,200 of MUL's 5,822 workers are staying away from the premises
as they refuse to sign an undertaking of good conduct-is that it comes
at a critical moment when the company is stepping on gas to cope with
a new surge in competition.
 |
1995-96
- 10.17
1996-97 - 10.52
1997-98 - 11.91
1998-99 - 10.08
1999-2000 - 4.13 |
It is harakiri,
for the 50:50 joint venture between Suzuki Motor Company of Japan and
the Union government has, in its 18 years, created one of the country's
most powerful brands. The swept-wings logo of MUL (1999-2000 turnover:
Rs 9,672.5 crore) is carried by over three million cars out of a car population
of four million nationwide. The production disruption comes within 14
months of competition really building up, when, in the autumn of 1998,
Korean car majors Daewoo and Hyundai entered the market with their Matiz
and Santro brands while the Tatas joined the race with Indica. They made
significant inroads into the superior sub-compact car segment where MUL's
Zen was positioned as the leader since 1993. In the April-September quarter
this year, Santro, with 17,549, alone outstripped Zen's sale of 16,262,
while Matiz (12,707) and Indica (10,579) were close on its heels.
 |
| Reducing
margins and increasing competition has put Khattar under pressure |
With MUL's
market share of passenger cars down to 60 per cent from 83 per cent in
the early 1990s, and as many as 11 companies scrabbling the market for
more buyers, the ex-autocrat of the automobile sector had unrolled an
elaborate plan to retain its primacy and retrieve lost ground. However,
the company's survival strategy is being torpedoed by a recalcitrant labour
union which sees nothing beyond its immediate interest, and the Heavy
Industries Ministry led by Manohar Joshi which is keen to keep the MUL
management under pressure so that the company's Japanese shareholders
do not insist on withdrawal of government ownership, as they did earlier.
Udyog Bhavan does not mind casting an indulgent glance at the trouble-makers
of the labour union to promote its larger cause.
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