India's Maruti shares sink after riot shuts car plant

MANESAR, Haryana Thu Jul 19, 2012 10:54pm IST

1 of 7. Police officials walk outside the Maruti Suzuki plant in Manesar July 19, 2012.

Credit: Reuters/Ahmad Masood

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MANESAR, Haryana (Reuters) - A deadly riot at a factory of Maruti Suzuki (MRTI.NS) shut the plant on Thursday and inflicted the biggest loss on its share price in almost two years.

Hundreds of police secured the 550,000-vehicle per year factory in Manesar, Haryana, and arrested 90 people after a mob tore through the plant on Wednesday, smashing property and burning parts of the facility beyond repair.

On Thursday, police combed through CCTV footage and interviewed witnesses as they searched for those responsible for the violence, in which a manager was killed and scores of employees were injured.

"We saw fire coming out of a nearby office and gradually it spread," said a senior company official, who declined to be named. "(Workers) destroyed company-owned and our own cars. Police had to escort us out," he said, speaking from a hospital after treatment for head and rib injuries and a broken hand.

Labour unrest at the factory, where the union has accused India's biggest car manufacturer of anti-worker and anti-union activities, cost the company more than $500 million in lost production in 2011.

The factory, which accounts for around a third of Maruti's total output, will remain closed on Friday because of the investigations, Suzuki Motor Corp (7269.T), which controls the carmaker, said in a statement.

Shares in Maruti, whose sales fell 11 percent in the fiscal year to March, partly as a result of the protracted strikes, fell 8.9 percent on Thursday, their biggest daily percentage drop since July 26, 2010.

Suzuki shares closed down 3.8 percent in Tokyo, at their lowest level since February 2009.

Wednesday's trouble flared after a disciplinary incident against one employee. Company officials say workers began to attack senior management during discussions, while the union said its representatives were attacked first.

Human resources manager Awanish Kumar Dev was burned to death during the riot, and the Japanese manager of the factory was also attacked, the company said.

"Armed with iron rods and door beams of cars, the mob spread out in groups in the factory area and targeted supervisors, managers and executives... rendering many of their victims bleeding and unconscious," Maruti said in a statement, adding that it was cooperating with police and government authorities in the investigation.

SPECIAL TEAM

The Haryana government has formed a special team to probe the riot, with officers trawling through footage from the factory and interviewing managers and workers' representatives.

"There will be a thorough investigation. It is a very serious matter," Haryana police spokesman S.A.S. Zaidi told Reuters. "The investigation circle is very big."

Ei Mochizuki, a Tokyo-based spokesman for Suzuki Motor Corp, said two Japanese staff had been hospitalised after the riot.

Iron rods and other sharp tools lay scattered outside the factory gate on Thursday, next to a burned out security building, as 1,200 police officers secured the site, around 40 km (25 miles) south of New Delhi.

Fifty management personnel and 9 police officers were injured in the clashes, said Maheshwar Dayal, deputy commissioner of police in Gurgaon. "We will make more arrests soon," he told reporters outside the factory.

Those arrested could be charged with murder, attempted murder and arson, said K.K. Sindhu, commissioner of police in Gurgaon.

Maruti and the Maruti Suzuki Workers Union (MSWU) said the violence stemmed from a disciplinary incident involving one employee.

"To resolve the issue amicably, members of the senior management met the union. During the talks, the workers attacked the members of the senior management, executives and managers," Maruti said in a statement late on Wednesday.

MSWU president Ram Meher accused the company of "anti-worker and anti-union activities" in a statement on Thursday.

The union is keen to talk with the company and government officials to resolve the dispute, Meher added.

(Writing and reporting by Henry Foy in MUMBAI; Additional reporting by Kentaro Sugiyama and Yoko Kubota in TOKYO; Editing by Tony Munroe and Tim Pearce)

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