So far, investors don't seem too worried about a workers' strike at a Maruti Suzuki India Ltd. plant. But they should not underestimate how long the strike could last and that it could spread to the company's larger factory nearby.
- Reuters
- Maruti Suzuki workers are demanding the recognition of a new union.
Maruti Suzuki, the local unit of Japan’s Suzuki Motor Corp., on Monday said that the strike of about 2,000 workers since Saturday caused a halt in production at its Manesar factory, in the northern Indian state of Haryana.
In afternoon trade Monday, Maruti Suzuki's shares were down 0.4% at 1,229.00 rupees ($27.4), in line with a 0.7% decline in the auto index. The 30-share benchmark Sensex was up 0.3%.
The workers are demanding the recognition of a new union and the company is in discussions with them to end the strike, a Maruti Suzuki spokesman said. The spokesman called the strike "illegal" but did not comment on whether the workers' demands will be met.
So why are investors not worried by the strike? Analysts said the strike comes at a time when car sales are slowing as buyers put off purchases due to rising fuel prices and more expensive auto loans. For Maruti Suzuki, May sales grew at their slowest pace in nearly three years and at half the pace of April. As a result, production halts will be cushioned by a high level of unsold stock at car dealerships.
Mayur Milak, an analyst at Mumbai-based Alchemy Share & Stock Brokers says inventory [...]
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