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Union Claim Maruti Used Bouncers ‘Nonsense,’ Police Says

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July 24 (Bloomberg) -- The police commissioner overseeing the probe into last week’s violence at a Maruti Suzuki India Ltd. plant dismissed labor union claims that bouncers paid by the company attacked them and set fire to part of the factory.

Union workers “indulged in criminal activities,” K.K. Sindhu, police commissioner for the Gurgaon district, said in an interview yesterday. “This is nonsense about the bouncers.”

Indian police, which said last week it would charge all 3,000 workers at the Manesar factory, are seeking to narrow their search as they investigate the events surrounding the most violent labor clash in Maruti Suzuki’s history. The carmaker, India’s largest by volume, has yet to say when it will resume production at the factory.

Ram Meher, president of the Maruti Suzuki Workers Union, hasn’t responded to calls to his mobile phone since sending a July 19 statement saying that the dispute started when a Maruti supervisor insulted a union worker because of his caste and that hundreds of bouncers paid by Maruti Suzuki attacked workers with weapons and damaged company property.

The shutdown of the factory, under lockdown pending the conclusion of the investigation, is costing the company a daily production loss of about 1,600 cars worth 700 million rupees ($12.5 million), according to Ashvin Shetty, an analyst at Mumbai-based Ambit Capital Pvt.

Making Repairs

Vikram Khazanchi, head of the Manesar plant, who was injured in the violence, on July 19 denied the company hired bouncers.

Today at the plant, construction workers could be seen making repairs to the burnt security booth near the gate. Fewer police officials were present at the site, compared with yesterday, with about 10 officers stationed outside the plant and more inside.

Maruti’s stock has fallen 10 percent in Mumbai trading since July 18, when a brawl between a union worker and a supervisor escalated into a full-blown riot that hospitalized 90 managers and supervisors of the company, and led to the death of a human-resources general manager. Shares of Suzuki Motor Corp., which owns a majority of Maruti Suzuki, has declined 7.8 percent in Tokyo trading in the same period.

In Haryana, the home state of the Manesar plant, Chief Minister Bhupinder Hooda said yesterday the local government appointed K.T.S. Tulsi, a former additional solicitor general of India, as special prosecutor. The government on July 19 named a special investigation team to arrest union leaders of Maruti’s Manesar plant.

Under Lockdown

Maruti Suzuki Chairman R.C. Bhargava, who met with Haryana government officials, said yesterday that the company would discontinue its internal probe in favor of the police investigation. Bhargava said July 21 that the company is under lockdown until the conclusion of the investigation.

Police arrested 99 people in connection with the violence, Ranjiv Singh Dalal, director general of police of Haryana state, said July 19.

Commissioner Sindhu said yesterday the police isn’t pursuing pressing charges on all 3,000 union workers -- a pledge made by Deputy Commissioner Maheswar Dayal days earlier -- and is mainly detaining employees to obtain information about the incident. Management is free to resume operations at the Manesar factory, Sindhu said.

The Manesar plant, built in 2007, is the smaller of Maruti Suzuki’s two manufacturing factories. It accounts for about 40 percent of the company’s total capacity and is the only site where the company assembles its top-selling Swift and Dzire models.

Gujarat Investment

The factory at Gurgaon, about 12 miles northeast of Manesar, has been operating at full capacity since last week’s incident, according to the company.

Narendra Modi, chief minister of India’s Gujarat state, who’s on a visit to Japan, said he doesn’t plan to ask Suzuki officials about further investments when he meets company officials tomorrow.

“Issues of expansion is all over,” Modi said in an interview in Tokyo today. “All I want to talk with them was completed four months ago. Now there is no need to talk about anything.”

To contact the reporters on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net; Karthikeyan Sundaram in New Delhi at kmeenakshisu@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net; Neil Denslow at ndenslow@bloomberg.net

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