Maruti Suzuki, India's largest car maker faces supply woes as the stocks of its two most popular car brands Swift and DZire have dried out, following the shutdown at its Manesar plant in the state of Haryana.
Maruti's Manesar plant, which manufactures the Swift and DZire models, was shutdown following violent clashes that erupted between the management and the workers last Thursday. The plant that accounts for one-third of Maruti's car production capacity in the country has entered its second week of lockout as the company struggles to come to terms with the violence targeting its senior officials at its key plant.
The company said Friday, in a statement, that it could not confirm when the production would resume. "There is no damage to the production line. Damage only to administrative offices," the statement said.
Suppliers and analysts expect that it might take a month for the production to resume at the plant. The reopening of Manesar plant is crucial for the company as it is the only plant that makes the Swift, one of the top selling cars in India. The hatchback model already has a waiting period of two months and the current shutdown is going to extend the waiting period further.
The company speaking to the local media on Thursday said that there were no more stocks of the Swift and DZire in the inventory, except for 10,000 units of both the models that are currently in transit.
The company said that it has a total booking order for 55,000 units of the Swift and 65,000 units of the DZire. The bookings for the Swift and DZire are still on and the demand is expected to increase with the festival season coming up next month.
The Manesar plant has witnessed much unrest between the management and the workers' union in the past two years. The production was stopped at least three times in the last year due to the workers' strike affecting the carmakers' sales for several months during the September-October festival season.
"If it takes around a month or so, then the volumes going into the festival season will be impacted, which could bring down the overall volumes for the company ... which was the case last year as well. They cannot achieve full production immediately once restarting the plant," Yaresh Kothari, auto analyst at Angel Broking in Mumbai told Reuters.
The shutdown at the plant has also negatively affected the business of several companies that supply car parts to Maruti.
The recent clashes claimed the life of Maruti's senior HR official, who was beaten up and left to burn to death. Several other officials were also injured. Around 90 persons, mostly the workers at the plant were arrested for murder and rioting.
The company shares have slid down to around 10 percent since the violence and the shutdown. Maruti's shares were trading at Rs. 1,116.05, 1.15 percent up in the NSE-Nifty at 2 p.m. local time.