Maruti workers to meet minister on sell-off issue

The employees' union of Maruti Udyog Limited, the country's largest carmaker, on Tuesday urged the government against diluting further stake in the company.

Representatives of the union -- Maruti Udyog Employees Union -- will be seeking an audience with Minister for Heavy Industries Manohar Joshi to prevent the government from reducing its holding below the existing 50 per cent, MUEU general secretary Mathew Abraham said.

The union, he said, has decided to protest every move to reduce government holding below the existing 50 per cent.

This fresh initiative comes in the wake of the statement made by Divestment Minister Arun Shourie that the government favoured offloading its stake in Maruti Udyog Limited and was open to offers from foreign partners while selling off stake in the company.

"There is no need for government to make automobiles in this liberalised era. In case of war, the country needs airlines and not automobiles and there needs to be a differentiation between automobiles and airlines," Shourie had said in an interview to Doordarshan.

MUL was incorporated in February 1981 as a Government of India-owned company, and had entered into a license and joint venture agreement with Suzuki Motor Corporation of Japan in October 1982 to manufacture fuel efficient cars at low cost.

Following the joint venture agreement, SMC increased its stake in stages to 50 per cent by 1992. MUL's equity capital of Rs 1.33 billion and its shareholding has remained unchanged since then with SMC holding 50 per cent, GoI 49.74 per cent and MUL Employees' Mutual Benefit Fund 0.26 per cent.

Under the joint venture agreement between the two partners, the Japanese partner has the first right of refusal in case the Indian government decides to dilute its holding in the venture.

Meanwhile, Abraham said divestment of Maruti would create a private sector monopoly and would harm consumer interest.

"Divestment in MUL would destabilise industrial relations in Maruti."

In an earlier letter to Joshi, the union, representing 4,800 workers, had stated that the company has been recording profits in the past. "The profits will increase in the coming years as 60 per cent of the investment made by the company has already been depreciated. Besides, the company shall overcome competition in the coming two years by successfully marginalising other players in the industry."

"The government, which invested 74 per cent and took 100 per cent risk of the total investment in building up the company in the initial stages, is losing it for no reason. The government has already sold off its 24 per cent holding to Suzuki on the net value in 1987 and 1992, and later also handed over day-to-day management control to the Japanese partner. Divestment of further stake in the company would not be in the interest of the company and consumers,'' he added.

Abraham further stated that in accordance with the directive principle of ensuring participation of workers in the management, an employee's mutual benefit fund was constituted and approval was granted for giving 10 per cent shares to the employees through that fund.

"However, the government stopped giving shares to the employees after its stake was reduced to below 50 per cent, stating that government would not reduce percentage of its equity in the company to a minority. So what is the reason behind reducing its equity holding now?"

Citing the example of Malaysian national car maker Proton, Abraham said, "The Malaysian government has been nurturing this company, which can now produce its own models and compete with multinationals. By doing this, the Malaysian government has proved that economic liberalisation does not mean that the government has no role in producing passenger cars. We should learn from their example and strive towards making Maruti a matter of national pride."

UNI

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