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Maruti workers demand representation on company board

Fresh trouble is brewing at Maruti Udyog Limited, aggravating the ongoing tussle for supremacy between the Government of India and the Suzuki Motor Corporation in India's premier car company.

The powerful MUL Employees Union has demanded a nine per cent stake and a place on the board of directors in the government-Suzuki 50:50 joint venture.

Union leaders plan to make a representation to the company with their demands. If their proposal for an increased stake is not conceded by the GOI and Suzuki, the union will petition the Supreme Court.

Labour leaders say their claim for an increased stake in the car venture is not a new one. "We want the government and Suzuki to honour the commitment they had given the employees in 1990," union General Secretary Mathew Abraham told Rediff On The NeT.

Currently, the employees union holds a 0.27 per cent stake in MUL, which is not adequate for it to intervene in the current power struggle.

Abraham claims the battle for supremacy between the government and Suzuki would not have intensified had the employees's nominee been present on the company's board of directors.

When the Maruti Employees Mutual Benefit Fund was set up in 1990, the employees were given an option to buy a nine per cent stake in the company.

The idea was that the government, which then held 60 per cent of the equity stake, would lower its stake to 51 per cent stake, giving the union 9 per cent. SMC then held a 40 per cent stake in the company.

But in 1992, the government sold off 10 per cent of its stake to the Japanese car giant, making both the government and Suzuki equal partners in Maruti. Now, both hold 50 per cent each of the Rs 1.32 billion paid up capital of Maruti, whose turnover in 1996-97 was Rs 80 billion.

The union, which bought 0.27 per cent of the equity of the government's stake in 1990, continues to be in the same position. "The main problem of this negligible stake is that the union does not have any voting rights at board meetings," says Abraham.

At present, the union is represented at board meetings by a public trustee appointed by the Department of Company Affairs. The trustee, however, does not have any voting rights.

"The employees are against this kind of an arrangement," declares Abraham. "We want our representative's vote to be crucial in situations like the present power struggle."

The MUL joint venture agreement says the board of directors will consist of not more than 12 members, representing equally the government and Suzuki.

The union leaders insist the controversy over the appointment of Managing Director R S S L N Bhaskarudu would not have arisen if the composition of the board was not equal and an employees's nominee was a member of the board.

"We will move the Supreme Court if the government and Suzuki do not agree to our demand for a nine per cent stake in MUL," warns Abraham.

The union leaders have taken up the matter with both the government and Suzuki many times in the past, but both partners have not yet shown any willingness in conceding the union's demands.

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