Maruti Suzuki to restart Manesar plant next week

Tokyo: India's largest car maker Maruti Suzuki India Ltd will restart production at its Manesar factory early next week after a deadly riot shut the plant last month, the Nikkei business daily reported.

The 550,000 vehicles-a-year factory in Haryana, where the unit of Japan's Suzuki Motor Corp makes its best-selling Swift hatchback, has been idle since the July 18 clash between workers and management over pay left one dead, scores injured and parts of the plant burned out.

The shutdown of the factory, which made about 1,700 cars a day before the unrest, is costing the company tens of millions of dollars, and more than 2,500 workers have taken to hiding, fearing punishment from Maruti or police, say residents and unions.

Production at the plant will take one to two months to return to pre-shutdown levels as the Indian carmaker ensures the safety of the facility, the Nikkei reported on Wednesday, citing an unidentified Maruti official.

Maruti plans to enlist about 500 guards to help bolster security at the plant, which will restart in stages beginning with welding and press operations, the Nikkei said.

Two phone calls to the plant's spokesman seeking comment went unanswered.

"This announcement did not come from us, so we are unable to comment on its validity," said Ei Mochizuki, a spokesman for parent Suzuki Motor.

A one-month shutdown would cut parent Suzuki's operating profit by around 6 billion yen, equal to 5 per cent of the Japanese car maker's 120 billion yen forecast for the year to end-March 2013, analysts estimate.

"However, if the company can recoup production after reopening the plant, losses could diminish further on a fiscal year basis," Goldman Sachs said in a report.

"Additionally, in light of India inventories of 110,000 vehicles in early August, we would expect sales opportunity losses to be limited."

Suzuki Chairman and CEO Osamu Suzuki is slated to visit India next week, but has no plans to visit the Manesar facility, the Nikkei wrote. A Suzuki spokesman declined to comment on the travel plans of its head.

Shares of Suzuki were unchanged against a 0.7 per cent dip in the Nikkei 225 average in afternoon Tokyo trade.

The July 18 clash has rattled corporate India and shone a light on outdated and rigid labour laws in a country where cheap labour drives manufacturing and draws foreign investment.

High inflation, a shortage of skilled labour and rising aspirations have emboldened workers' demands.

Other foreign car makers, such as Hyundai and Honda, have seen labour unrest at their Indian plants in recent years.