NEW DELHI: Maruti, which is synonymous with Haryana and Gurgaon, is looking outside the state to set up its operations. The continuing labour unrest at its Manesar and Gurgaon plants appear to have hastened its search, and the company is zeroing in on Gujarat.
Sources say the Japanese automaker, frustrated over the repeated interruptions in production due to labour problems at Manesar, wants to quickly finalize its expansion plans beyond Haryana, something that's not liked by the state government but is seen as "urgent" by the company's management.
Already, Maruti car sales have been affected, and more worryingly for the firm, the demand seems to have been hit because of the uncertainty about delivery schedules, making the management of the country's biggest car-maker rather anxious.
While Suzuki chairman Osamu Suzuki met Gujarat chief minister Narendra Modi on September 8-after the collapse of the first peace agreement and in between the second labour strike-the company's board looks set to approve the proposal to invest Rs 18,000 crore, including Rs 6,000 crore by auto ancillaries, in Gujarat for a plant spread over 1,000 acres and with a capacity of two million units.
Interestingly, this will be the largest factory site for Suzuki globally, bigger than the combined size of its existing sites at Gurgaon and Manesar. The new facility in Gujarat will mark the beginning of a slow shift out of Haryana-a move that could affect not just the automobile hub in Delhi's neighbourhood but also impact real estate activity in and around Gurgaon. Already, several automakers, ranging from Tata Motors to Ford and Peugeot-Citreon, have started work on setting up facilities in Gujarat, which is emerging as a major auto hub in the country.
For Haryana, this will be the second blow after Japanese auto major Honda Motorcycles and Scooters India decided to set up plants in Rajasthan and Karnataka following major labour unrest at its Manesar facility. Like HMSI, Maruti Suzuki executives admit in private that the Japanese management is not particularly happy with the Haryana government's handling of the labour problems at its Manesar car plant as well as its engine and parts manufacturing facilities. The production loss to the company due to the three strikes, including the current one which has already lasted 12 days, has been over 60,000 units, resulting in a production loss of a Rs 1,800 crore. In the June quarter, Maruti's total income was estimated at Rs 8,500 crore, while the profit was Rs 550 crore.
Maruti chairman R C Bhargava refused to comment on the manner in which the Haryana government has handled the crisis, but minced no words while describing the present state of affairs in the belt. He said, "The labour here is militant, and if there is no improvement in the situation, this belt will surely suffer industrially. Not only Japanese investments, but investment plans of other countries and companies will also be hit."
The fresh labour unrest at Manesar seems to have jolted the company out of, what many insiders describe as, its "comfort zone". "There is clearly a need, an urgency, to look for a new production hub," they said.
In 2009, Haryana chief minister Bhupinder Singh Hooda had told a public gathering (in the presence of current Maruti MD Shinzo Nakanishi) that he had been assured by Osamu Suzuki that all Maruti's expansion plans would be undertaken "only in Haryana". Maruti's flirtation with Gujarat now also betrays its disillusionment with Haryana. Company executives also say in private that the movement beyond Haryana (especially the NCR region) will also mean that Maruti is insulated from the "Delhi's political influence". Bhargava has already blamed the political interferences for the labour troubles at the company, though he has refrained from naming anyone.
If the Gujarat proposal goes ahead, the production from the site at Becharji in Mehsana is expected to start by 2015. In the first phase, which will be completed by 2020, a capacity for one million units will be build. The next phase of expansion will follow.
Sources say the Japanese automaker, frustrated over the repeated interruptions in production due to labour problems at Manesar, wants to quickly finalize its expansion plans beyond Haryana, something that's not liked by the state government but is seen as "urgent" by the company's management.
Already, Maruti car sales have been affected, and more worryingly for the firm, the demand seems to have been hit because of the uncertainty about delivery schedules, making the management of the country's biggest car-maker rather anxious.
While Suzuki chairman Osamu Suzuki met Gujarat chief minister Narendra Modi on September 8-after the collapse of the first peace agreement and in between the second labour strike-the company's board looks set to approve the proposal to invest Rs 18,000 crore, including Rs 6,000 crore by auto ancillaries, in Gujarat for a plant spread over 1,000 acres and with a capacity of two million units.
Interestingly, this will be the largest factory site for Suzuki globally, bigger than the combined size of its existing sites at Gurgaon and Manesar. The new facility in Gujarat will mark the beginning of a slow shift out of Haryana-a move that could affect not just the automobile hub in Delhi's neighbourhood but also impact real estate activity in and around Gurgaon. Already, several automakers, ranging from Tata Motors to Ford and Peugeot-Citreon, have started work on setting up facilities in Gujarat, which is emerging as a major auto hub in the country.
For Haryana, this will be the second blow after Japanese auto major Honda Motorcycles and Scooters India decided to set up plants in Rajasthan and Karnataka following major labour unrest at its Manesar facility. Like HMSI, Maruti Suzuki executives admit in private that the Japanese management is not particularly happy with the Haryana government's handling of the labour problems at its Manesar car plant as well as its engine and parts manufacturing facilities. The production loss to the company due to the three strikes, including the current one which has already lasted 12 days, has been over 60,000 units, resulting in a production loss of a Rs 1,800 crore. In the June quarter, Maruti's total income was estimated at Rs 8,500 crore, while the profit was Rs 550 crore.
Maruti chairman R C Bhargava refused to comment on the manner in which the Haryana government has handled the crisis, but minced no words while describing the present state of affairs in the belt. He said, "The labour here is militant, and if there is no improvement in the situation, this belt will surely suffer industrially. Not only Japanese investments, but investment plans of other countries and companies will also be hit."
The fresh labour unrest at Manesar seems to have jolted the company out of, what many insiders describe as, its "comfort zone". "There is clearly a need, an urgency, to look for a new production hub," they said.
In 2009, Haryana chief minister Bhupinder Singh Hooda had told a public gathering (in the presence of current Maruti MD Shinzo Nakanishi) that he had been assured by Osamu Suzuki that all Maruti's expansion plans would be undertaken "only in Haryana". Maruti's flirtation with Gujarat now also betrays its disillusionment with Haryana. Company executives also say in private that the movement beyond Haryana (especially the NCR region) will also mean that Maruti is insulated from the "Delhi's political influence". Bhargava has already blamed the political interferences for the labour troubles at the company, though he has refrained from naming anyone.
If the Gujarat proposal goes ahead, the production from the site at Becharji in Mehsana is expected to start by 2015. In the first phase, which will be completed by 2020, a capacity for one million units will be build. The next phase of expansion will follow.
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