July 20 (Bloomberg) -- Indian authorities threatened to charge all 3,000 Maruti Suzuki India Ltd. union workers at a plant after a riot that the labor union says began when a supervisor insulted an employee because of his caste.
Authorities will press charges of murder and attempted murder against all rioting workers at Maruti’s Manesar plant because they engaged in a mob attack that led to a person’s death, Maheswar Dayal, deputy commissioner of police, said in an interview yesterday. The police have arrested 99 workers and deployed 1,200 officers to secure the area, Director General of Police Ranjiv Singh Dalal said.
Indian police occupied the suspended factory, which accounts for about 40 percent of Maruti’s total capacity, as they begin investigating the company’s most violent labor clash. Maruti and Suzuki Motor Corp. shares tumbled as the violence revived concerns about recurring labor disputes at the Indian carmaker, which suffered through a 33-day labor strike last year that drove down profit.
“I think it may take 8-to-10 days to resume operations at Manesar,” said Umesh Karne, an analyst with BRICS Securities Ltd. in Mumbai. “The concern is that with this shutdown, the majority of Maruti’s diesel car production may be hit as the Swift and DZire’s diesel models are made at Manesar.”
A person was burnt to death and at least 70 managers at the factory were injured, K.K. Sindhu, police commissioner for the Gurgaon district, said in a phone interview. Maruti identified the deceased as Awanish Kumar Dev, a human resources general manager.
Suzuki, which owns a majority stake in the Indian carmaker, said production facilities weren’t damaged by this week’s riot.
“This is a crazy scene of violence,” Dalal said. “There are skirmishes between workers and management everywhere, but this kind of violence will not be tolerated.”
At the factory, located about 50 kilometers (31 miles) southwest of New Delhi, trucks rolled in yesterday carrying police, who formed a security cordon around the plant. Two dozen private guards manned the gates of the closed factory, which only had police inside.
Maruti shares tumbled 8.9 percent, its biggest drop in almost two years, to 1,117.30 rupees in Mumbai. Suzuki fell to its lowest close since February 2009 in Tokyo, dropping 3.8 percent to 1,451 yen.
Both Maruti and the union blamed each other for the incident.
According to Maruti, the dispute began July 18 after a worker beat up a supervisor on the shop floor. The workers’ union then prevented management from taking disciplinary action, blocking managers from leaving the factory after work, Maruti Suzuki said. Workers attacked managers after talks to resolve the dispute failed, with workers setting property on fire, ransacking offices and damaging facilities, according to the statement.
Two Japanese executives were hospitalized, though neither is in critical condition, said Ei Mochizuki, a Tokyo-based spokesman at Suzuki. Damages were restricted to offices, not production facilities, Mochizuki said.
The workers’ union said it was keen to have a dialogue with the company to resolve the matter and that workers were attacked by bouncers working for Maruti while discussions were ongoing with guild leaders.
The incident started after a supervisor abused a worker and made derogatory remarks about his lower caste, known as Dalit, Maruti Suzuki Workers’ Union President Ram Meher Singh said in an e-mailed statement. The company suspended the worker instead of taking action against the supervisor, Singh said.
Maruti spokesman Puneet Dhawan couldn’t be reached by telephone and didn’t respond to an e-mail seeking comment on the labor union’s statement.
Production at the factory, which makes Maruti Suzuki’s Swift compact cars, had to be halted, the company said. Output at the larger Gurgaon plant continued normally, it said.
The company’s factory in Manesar, built in 2007, has a capacity to produce 550,000 cars annually, about 40 percent of Maruti’s total capacity of 1.45 million cars, according to the company’s website. Manesar is 25 kilometers south of Gurgaon.
The company is building a third unit at Manesar that is due to be completed in 2013, with a capacity to produce 250,000 additional units.
In October, a labor strike in Manesar halted output of Swift compact cars. Workers also staged strikes at parts maker Suzuki Powertrain India Ltd., causing production to be halted at Maruti’s factory in Gurgaon, also near the capital. The strike ended after an agreement was reached between management, workers and the state government. The strike cost the company more than 40,000 units of production, Maruti said.
The Manesar-Gurgaon region is an industrial hub that is home to factories of Hero MotoCorp Ltd., Honda Motorcycle & Scooter India Pvt., and auto parts suppliers Sona Koyo Steering Systems, and Rico Auto Industries Ltd.
In the past few years, there have been strikes at factories belonging to Rico, Honda and Hero as workers stopped work to demand higher pay and permanent employee status for contract employees. In 2008, the managing director of Graziano Trasmissioni India Ltd. was beaten to death after a group of dismissed employees turned violent, police said.
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