Maruti Profit Declines as Import Costs Rise, Rupee Falls

By Siddharth Philip - Jul 28, 2012

Maruti Suzuki India Ltd. (MSIL), India’s biggest carmaker by volume, said first-quarter profit declined 23 percent as a weaker rupee pushed up import costs.
Net income at Suzuki Motor Corp. (7269)’s Indian unit fell to 4.24 billion rupees ($77 million) in the three months ended June 30, from 5.49 billion rupees a year earlier, the New Delhi-based company said yesterday. That missed the 4.9 billion-rupee median of 26 analysts’ estimates compiled by Bloomberg.
The earnings underscore the challenges Chief Executive Officer Shinzo Nakanishi faces after the automaker’s most violent labor dispute this month led to a manager’s death and prompted it to stop production at one of its factories. The company, which makes about 40 percent of the cars sold in the country, may risk losing its market share should the stoppage continue for a month, said Umesh Karne, an analyst with BRICS Securities Ltd. in Mumbai.
“Maruti can’t afford to keep the plant closed,” Karne said in a telephone interview. “Customers may not be willing to wait,” with rivals including Hyundai Motor Co. and Tata Motors Ltd. (TTMT) offering vehicles at competitive prices, he said.
A general manager was killed and dozens of executives injured on July 18 at Maruti’s plant in Manesar, in northern Haryana state. Chairman R.C. Bhargava on July 21 announced a lockout and ruled out an early resumption of the factory.

Labor Dispute

The current stoppage is the carmaker’s fourth in the past year at the factory. The dispute began after a worker beat up a supervisor on the shop floor. The union then prevented the management from taking disciplinary action, blocking managers from leaving the factory after work, Maruti Suzuki has said.
Maruti rose 0.4 percent to 1,112.95 rupees in Mumbai on July 27. The stock has declined 9.3 percent since the riot, compared with the benchmark Sensitive Index (SENSEX)’s 2 percent drop.
The automaker, 54 percent owned by Suzuki, sold 295,896 vehicles in the quarter, Maruti said. Sales of the DZire sedan surged 87 percent, while that of Swift, Estilo and Ritz hatchbacks rose a combined 31 percent. Sales of the SX4 sedan declined 74 percent in the quarter, according to a company statement on July 2. Exports rose 6 percent to 32,632 units.
Sales increased 27 percent to 105 billion rupees from 82.6 billion rupees a year earlier, Maruti said. The median of 40 analysts’ estimates compiled by Bloomberg was for revenue of 99.4 billion rupees.
Raw material costs increased 26 percent to 80.6 billion rupees, the company said in an e-mailed statement.

Costs Double

Maruti’s costs for importing components has more than doubled in the past few years because of the weakening of the rupee, Chief Financial Officer Ajay Seth said in an interview earlier this month. Exports contribute 8 percent of total sales, while it spends about 21 percent on importing components such as electronics and diesel engine parts, he had said.
“The currency hit Maruti, both on imports as well as royalty payments to Suzuki,” said Karne at BRICS Securities. “With the current economic scenario, we will have to see where the rupee goes.”
The rupee weakened about 20 percent against the dollar and the yen in the 12 months ended June 30. In the quarter to June 30, the local currency slumped 12 percent against the yen and 8.6 percent versus the greenback.
“Adverse currency movements, notably the yen-rupee exchange rate, impacted profit negatively,” according to the company’s statement.

Slowing Growth

India’s economic growth slowed to the weakest in almost a decade in the quarter that ended in March and the rupee slumped to a record low amid a paralysis in policy making that has hurt efforts to spur investment as a global recovery falters.
Maruti’s sales in the nine-month period ended Dec. 31 declined 17 percent because a labor dispute at its Manesar factory resulted in an output loss.
The recent lockout comes amid a slowdown in car sales in India as high gasoline prices and interest rates deter buyers. The Society of Indian Automobile Manufacturers on July 10 cut its forecast for growth to a range of 9 percent to 11 percent for the year ending March 31 from an estimate of 10 percent to 12 percent given in April.
Should the plant, which accounts for about 35 percent of the company’s total output, stay shut for two months, it will hurt Maruti’s revenue and profit, R. Murali Krishnan and Mitul Shah, analysts at Karvy Stock Broking Ltd. in Mumbai, wrote in a note on July 25.
“We see the current event at Maruti’s Manesar plant as a structural impact on its business, as it is more related to humanitarian and psychological aspects beyond the financial implications,” wrote Krishnan and Shah, who rate the stock underperform. “We don’t see light at the end of the tunnel, at least for the time being.”
To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

ICICI Bank Profit Exceeds Estimates on Wider Lending Margin

By Anto Antony - Jul 27, 2012

ICICI Bank Ltd. (ICICIBC), India’s second- largest lender by assets, posted first-quarter earnings that beat analysts’ estimates as lending operations became more profitable and bad loans shrank.

Net income climbed 36 percent to 18.2 billion rupees ($328 million), or 15.71 rupees a share, for the three months ended June 30, from 13.3 billion rupees, or 11.51 rupees, a year earlier, the Mumbai-based lender said in an exchange filing today. That surpassed the 17.4 billion-rupee median of analysts’ estimates compiled by Bloomberg.

The highest profit growth in five quarters will bolster Chief Executive Officer Chanda Kochhar’s efforts to expand credit by about 20 percent this year, exceeding the industry’s estimated 17 percent to 18 percent growth. ICICI, which has the highest capital buffer among India’s five largest banks, is also the best performer among those stocks, with a 35 percent rally this year.

“With good asset quality and net income growth, ICICI remains one of the top picks for investors among Indian banks,” said Nitin Kumar, a Mumbai-based analyst at Quant Broking Ltd. “Bad loans at the lender seem to be under control now.”

Shares of ICICI rose 2 percent to 925.15 rupees as of 2:45 p.m. in Mumbai trading today. The stock has surpassed the 9 percent gain in the benchmark BSE India Sensitive Index this year, as well as the 27 percent advance in the Bankex index, which tracks 14 lenders.

Margin Forecast

Net interest income, or revenue from lending minus payments on deposits, rose 32 percent to 31.9 billion rupees while non- interest income climbed 14 percent to 18.8 billion rupees. Domestic corporate loans climbed by 28 percent during the quarter, the bank said.

The net interest margin, a measure of lending profitability, widened to 3.01 percent during the quarter from 2.61 percent a year earlier. The bank will aim to keep the margin at more than 3 percent this year, Kochhar told reporters on a conference call today.

The net bad-loan ratio shrank to 0.61 percent from 0.91 percent a year earlier, ICICI said in the statement today.

ICICI recovered 4.3 billion rupees in loans made to Kingfisher Airlines Ltd. (KAIR), the cash-strapped Indian carrier controlled by billionaire Vijay Mallya, Jaspreet Kaur, a spokeswoman for the bank, said on July 2, without providing additional details. The airline has no remaining debt outstanding with the bank, she said.

Restructured Assets

The sale of those loans reduced the total restructured assets at ICICI, Kochhar told reporters today.

Indian corporate borrowers have sought to change the terms on more than 2 trillion rupees in souring debt as of March 31, doubling from 2009, according to the website of a corporate debt restructuring program managed by local lenders. The central bank has since recommended that banks need to more than double provisions for such loans to shield against defaults.

ICICI in April was placed under review for a downgrade of its financial strength rating by Moody’s Investors Service, which cited the lower sovereign-debt rating as a reason. The three-month review will take into account the cross-border diversification of operations and their domestic sovereign debt holdings, among other factors, Moody’s said at that time.

To contact the reporter on this story: Anto Antony in Mumbai at aantony1@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Agarwal Taps Liberia as Home Ore Output Slumps: Corporate India

By Abhishek Shanker - Jul 26, 2012

Sesa Goa Ltd. (SESA)’s reserves at its Liberian mines may be triple the original estimate, improving prospects for India’s biggest iron-ore exporter that is struggling to boost output because of extraction curbs at home.

Mines at Western Cluster Ltd., 51 percent owned by Sesa, may have as much as 3 billion metric tons of the so-called magnetite variety, up from an estimated 1 billion tons, Managing Director Prasun Kumar Mukherjee said in an interview. The company, controlled by billionaire Anil Agarwal, has 374 million tons of reserves in India. Output fell last quarter because of a mining ban in Karnataka state.

Sesa plans to spend as much as 4.5 billion rupees ($81 million) to tap the mine in the West African nation this year after failing to double output in India. The Liberian mine may help the company, established in 1954 as Scambi Economici S.A. Goa, meet demand from steelmakers in India, where consumption of the alloy is forecast by the government to rise an average 9 percent annually till 2017, as well as Europe and China.

“The Liberian reserve can prove to be a big boost for the company’s earnings,” said Giriraj Daga, an analyst at Nirmal Bang Securities Ltd. in Mumbai, who recommends buying the stock. “At current reserve and resource estimates, we assume the output can be about 25 million tons a year or double the India production.”

The company forecasts shipments from Liberia to start by March 2014, Mukherjee said on July 25.

Increase Stake

Sesa has applied to buy the shares it doesn’t own in the Liberian mine from Elenilto Minerals & Mining LLC, according to a statement on the website of the African nation’s Ministry of Information, Cultural Affairs and Tourism. Sesa spokesman R. Krishnagopal declined to comment about the company’s plan to increase stake in the venture.

Sesa Goa has risen 9.2 percent this year, compared with an 11 percent drop in the Bloomberg World Mining Index. The shares dropped 2.5 percent to 178.35 rupees in Mumbai yesterday.

With an iron content of 35 percent, the ore in Liberia will help Sesa produce 1 billion tons of iron ore concentrate, Mukherjee said. The company spent $90 million in acquiring stake in the mine in 2011, joining ArcelorMittal, OAO Severstal and Chevron Corp. in investing to develop mining, rubber and oil industries.

The African nation, which has been rebuilding its economy after civil wars between 1989 and 2003, has attracted more than $16 billion in investments since Ellen Johnson-Sirleaf, who won the Nobel Peace Prize last year, became president in 2005.

Regulatory Hurdles

The mine in Liberia “has huge reserves but the company may face regulatory hurdles in the country,” said Ashish Karana, a broker at K. Motiram Vakil in Mumbai. “We can’t say with certainty that Sesa won’t face a situation” similar to what Jindal Steel & Power Ltd. (JSP) is facing in Bolivia, he said.

Jindal Steel on June 17 said it terminated a contract to build the $2.1 billion El Mutun mine in Bolivia. Authorities in the Latin American country also arrested two Jindal Steel employees, the company said.

Tata Steel Ltd. and Steel Authority of India Ltd. have also failed to develop projects overseas. Tata Steel’s proposed $5 billion factory in Vietnam has been delayed for more than five years by regulatory hurdles.

Falling prices of the ore may also discourage mining. Iron ore for immediate delivery declined for the 12th consecutive day yesterday to the lowest since Oct. 28.

The price of ore with 62 percent iron content delivered to the Chinese port of Tianjin slipped 1.1 percent to $117.30 a ton, according to data compiled by the Steel Index Ltd. The price has fallen to its lowest level in more than eight months on concern that demand in China, the world’s biggest buyer, is declining and Europe’s worsening debt crisis will curb global growth.

Illegal Mining

Profit at Sesa, which is in the process of combining with Agarwal’s Sterlite Industries Ltd. (STLT), fell 76 percent to 2 billion rupees after excluding gains from its investment in Sterlite’s Cairn India Ltd. (CAIR) unit.

Output at Sesa’s mines tumbled 23 percent to 3.4 million tons last quarter because of transport restrictions in Goa state, where the company is based, and a mining ban in the southern state of Karnataka.

Trouble began in July 2010 after Karnataka , which produces 20 percent of the nation’s iron ore, halted exports to clamp down on illegal mining and tax evasions in the state. The Supreme Court banned mining in parts of the state a year later, pending probes into breaches of environmental norms.

Steelmakers are cutting output because of the lack of availability of the ore. Demand from steelmakers without their own iron-ore mines may increase 24 percent to 136 million tons this fiscal year, according to India’s steel ministry.

Sesa and Elenilto Minerals last year pledged to jointly invest more than $2.6 billion in the Liberian mine, with Sesa bringing in about $2.5 billion, according to a statement sent by Elenilto on Aug. 9.

“Liberia drilling is in full swing and there are positive signs about reserve and resource,” Mukherjee said.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Billionaire Gupta May Acquire U.S. Drug Brands: Corporate India

By Adi Narayan - Jul 26, 2012

Lupin Ltd. (LPC), the world’s biggest maker of drugs to treat tuberculosis, plans to acquire brands in the U.S. to reduce its reliance on less profitable generic medicines, President Nilesh Gupta said.

The Indian drugmaker founded by billionaire Desh Bandhu Gupta may purchase branded drugs to treat skin diseases and infections, the president said. The company hasn’t identified any acquisition yet, Gupta, son of the founder, said.

Lupin is seeking to maintain its fastest pace of quarterly sales growth in at least three years by adding to its product portfolio in the world’s biggest drug market. The company, named after a leguminous flower, and rivals including Ranbaxy Laboratories Ltd. (RBXY) are shifting strategy to cut their dependence on selling generic versions of medicines as the number of formulations losing patent protection plummets from their peak in 2012.

Purchasing a brand is “the No. 1 priority for the company,” Gupta, who has an MBA from the Wharton School of the University of Pennsylvania, said in a telephone interview on July 24. Lupin will seek to add drugs in the therapeutic segments it has expertise in, he said.

Lupin has advanced 28 percent this year, exceeding the 19 percent gain on the BSE India Healthcare Index. The stock fell 2 percent to 573.95 rupees at 9:52 a.m. in Mumbai.

The Mumbai-based company earned more than five times as much selling branded medicines such as Antara, a treatment for reducing cholesterol, compared with average sales of all its copycat formulations, according to Fortune Equity Brokers Ltd.

Copycat Versions

The drugmaker’s sales rose 44 percent to 22.2 billion rupees ($395 million) in the three months ended June 30, the fastest pace of growth in at least three years, according to data compiled by Bloomberg.

Lupin and larger rivals including Ranbaxy and Dr. Reddy’s Laboratories Ltd. (DRRD) are trying to boost profit by offering products that are similar though not identical to those protected by patents, claiming they are not copycat versions.

The U.S. Food and Drug Administration classifies such formulations as new drugs, and if approved, they can be sold exclusively for as long as three years in the U.S.

“If the product clicks, then you make a lot of money and your margins will be also higher,” Bino Pathiparampil, a pharmaceutical analyst at IIFL Ltd., said in an interview. “The development costs will be far higher than an ordinary generic though.”

Suprax Antibiotic

Lupin, established in 1968 by Chairman Gupta, a masters- degree holder in chemistry, started selling branded products in the U.S. in 2004 after acquiring Suprax antibiotic from Pfizer Inc.’s Wyeth unit. In the year ended March 31, Lupin got 28 percent of its U.S. sales from three branded medicines, while the balance came from generics.

“In this fiscal, they will generate enough cash from the patent expirations,” said Hitesh Mahida, an analyst at Fortune Equity Brokers. The company “may need to acquire a brand and launch it in fiscal 2014.”

Lupin’s sales are occasionally aided by the right to exclusively sell generic versions for six months when a drug loses patent protection, like in the case of the anti-psychotic Geodon. Such opportunities will decline as the number of medicines going off patent drops.

Four drugs with sales exceeding $500 million come off patent in the U.S. in 2016, compared with 10 this year, according to IMS Health Inc. Worldwide, pre-expiry spending on patented drugs will fall to $22 billion in 2016 from $47 billion this year, IMS Health data show.

FDA Approval

Ranbaxy, India’s biggest drugmaker, last month received FDA approval for a patent-protected variation of the generic acne medication isotretinoin. Sold under the brand Absorica, the drug developed by Cipher Pharmaceuticals Inc. (DND) is marketed as an improvement because unlike isotretinoin, it doesn’t have to be taken along with a high-fat meal.

The company, 64 percent owned by Tokyo-based Daiichi Sankyo Co. (4568), is looking to acquire similar products that are “innovative variations” of medicines already on the market, Chief Executive Officer Arun Sawhney said in a July 11 interview in Washington.

“At the moment, we’d be looking at assets that would strengthen our dermatology portfolio,” Sawhney said. These are products that have a “sustainable patronage and are not susceptible to competition from 20 companies on any particular day.”

Clinical Trials

Acquisition of branded drugs may boost costs at Lupin, according to Balaji Prasad, a Mumbai-based analyst at Barclays Plc. Selling such products requires a network of pharmaceutical sales representatives to approach physicians across the U.S. to promote the medicine over an existing, and often cheaper generic. The FDA may also require companies to conduct clinical trials on patients.

That can be a challenge for Indian drugmakers, who have mostly built their expertise in selling drugs to bulk buyers such as pharmacy chains and don’t have experience in conducting clinical trials on a large number of patients.

“It’s not going to be an easy strategy,” Barclays’ Prasad said by phone. “Making those changes to the drugs and selling it will require clinical trials and significant upfront investment.”

Lupin has a network of 170 sales representatives in the U.S. to sell its branded portfolio, Gupta, 38, said. The company’s future acquisitions are likely to be in an area that doesn’t require a large number of sales personnel, he said.

The company is focusing on brands that “don’t need 500 representatives to cover a good number of doctors,” Gupta said.

To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Exxon May Lead Drop in Global Oil Profits on Lower Prices By Will Kennedy and Brian Swint - Jul 24, 2012

The world’s largest oil companies are poised to report a drop in second-quarter earnings after crude prices declined for the first time in three years.

Exxon Mobil Corp. (XOM), the world’s biggest oil company by market value, will probably say tomorrow net income dropped 13 percent from a year earlier to $9.3 billion dollars, based on the average of five analysts’ estimates compiled by Bloomberg. Royal Dutch Shell Plc (RDSA), Europe’s top oil producer, is expected to see profit decline 4 percent after adjusting for certain gains and losses.

“We expect earnings to be down and for companies to miss the current consensus,” said Jason Gammel, an analyst at Macquarie Capital Europe Ltd. in London. “The oil price is the single biggest factor, and U.S. gas prices were particularly anemic. The one area that looks good is refining margins.”

Brent crude futures, a benchmark oil price used by much of the world, fell 7 percent from a year earlier to average $108.76 a barrel in the second quarter, the first year-on-year decline since 2009 as economic growth slowed in China and concerns mounted that the European debt crisis will erode demand.

Oversupplies from burgeoning shale-field output in the U.S. pushed natural-gas prices down 46 percent to average $2.354 per million British thermal units. Slumping prices more than offset gains in production, including the return of Libyan fields, and widening refining margins in the U.S. and Europe.

Lackluster Operations

Exxon, Shell, Statoil ASA (STL), BG Group Plc (BG/) and Spain’s Repsol SA (REP) all report tomorrow. Chevron Corp. (CVX) and Total SA (FP) will announce earnings on July 27 and BP Plc (BP/) on July 31.

“With earnings momentum negative, underlying operational performance lackluster and a perception that earnings risk across the reporting season is more heavily weighted to the downside, it is difficult to see 2Q reporting as a positive catalyst for the group,” Deutsche Bank AG analysts said in a July 20 note.

The bank expects earnings across European integrated oil companies to drop 7 percent.

The 13 members of the New York Stock Exchange Arca Oil (XOI) Index, which includes Exxon, Shell and BP, fell an average 14.4 percent in the last 12 months.

BP, Europe’s second-largest oil company, is expected to be among the worst performers in the second quarter, posting a 14 percent drop in adjusted net income, according to analyst estimates compiled by Bloomberg. Maintenance work on production platforms in the Gulf of Mexico and delays starting up fields in Angola restrained output, according to Deutsche Bank. In refining and marketing, profit probably rose 10 percent.

24 Percent Drop

Shell had a better quarter than its London-based rival, driven by gains in production from new fields even as maintenance cut output from the Gulf of Mexico fields and the Pearl gas-to-liquids plant in Qatar.

In the U.S., analysts at Barclays Plc (BARC) said the largest companies probably earned 24 percent less than a year earlier because of the drop in oil and gas prices.

Chevron Corp., the second-largest U.S. producer, is expected to have earned $6.4 billion during the quarter, according to analysts’ estimates.

“Although oil remains elevated in absolute terms, Brent was down, while exploration and production volumes will be seasonally lower,” Nomura analysts led by Theepan Jothilingam said in a research note. “In the U.S., Henry Hub prices remained depressed throughout the quarter.” Henry Hub in Erath, Louisiana, is the delivery point for futures traded on the New York Mercantile Exchange.

Oil demand in U.S. and China, which together consume almost one-third of the world’s crude, stagnated at 28.2 million barrels a day, little changed from a year earlier, according the International Energy Agency.

To contact the reporters on this story: Will Kennedy in London at wkennedy3@bloomberg.net; Brian Swint in London at bswint@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Maruti Suzuki Imposes Lockout at India Plant After Riot By Karthikeyan Sundaram and Siddharth Philip - Jul 23, 2012

Maruti Suzuki India Ltd. (MSIL), the country’s largest carmaker, fell in Mumbai trading after the company said it’s locking out a factory near New Delhi, pending the conclusion of a probe into a deadly riot last week.
The shares dropped as much as 5.4 percent to 1,085.90 rupees, leading India’s Sensitive Index lower. Suzuki Motor Corp. (7269), which owns a majority stake in Maruti Suzuki, declined as much as 2.9 percent to 1,381 yen in Tokyo trading.
Chairman R.C. Bhargava on July 21 ruled out an early resumption of the factory, which accounts for about 40 percent of the company’s manufacturing capacity, though he didn’t give an estimate as to how long the stoppage will last. Last week’s violence, which resulted in the death of a Maruti Suzuki general manager and at least 70 injuries, has led one of the nation’s biggest business lobbies to say the incident has undermined India’s reputation as an investment destination.
“It’s a matter of deep concern for a country that seeks to project itself as offering an environment that is business- friendly,” R.V. Kanoria, president of the Federation of Indian Chambers of Commerce and Industry, said in an e-mailed statement July 21, calling for authorities to deal “firmly” with the situation.
The automaker won’t import cars to make up for the loss of production at its Manesar factory, Bhargava told reporters in New Delhi July 21. The latest production stoppage is the fourth in the past year at Manesar factory.

Relocating Production

All 3,000 union workers at the plant will be charged with murder and attempted murder for the mob attack that caused the death of Awanish Kumar Dev, a human resources general manager, Indian police said July 19.
Maruti has no plans to relocate the plant out of Manesar in northern Haryana state, Bhargava said. A factory at Gurgaon, about 12 miles northeast of Manesar, is operating at full capacity, he said. Suzuki has said production facilities weren’t damaged by the unrest.
“This is bad news for Maruti as it may take as little as five days or as long as 50 days to identify the rogue elements in the workers who did this,” said Mahantesh Sabarad, an analyst at Fortune Equity Brokers India Ltd. in Mumbai. “It also shows the trust deficit between the management and the workers. This lockout comes at a very efficient factory that produces some of Maruti’s most popular models.”

Bad Timing

The lockout comes amid a slowdown in car sales in India as high gasoline prices and interest rates deter buyers. The Society of Indian Automobile Manufacturers on July 10 cut its forecast for growth to a range of 9 percent to 11 percent for the year ending March 31, 2013, from an estimate of 10 percent to 12 percent given in April.
India’s economic growth slowed to the weakest in almost a decade in the quarter ended March and the rupee slumped to a record low amid a paralysis in policy making that has hurt efforts to spur investment as a global recovery falters. The government’s recent setbacks include the December suspension of plans to let foreign companies such as Wal-Mart Stores Inc. (WMT) open supermarkets, and abandoning of plans to allow investment in the pension and insurance industries.
The rioting at Maruti “may definitely impact the investment in India in the short run,” Malvinder Singh, chairman of the Confederation of Indian Industry’s northern region, said on July 20.

Minister Visit

Narendra Modi, chief minister of India’s Gujarat state, who’s on a visit to Japan, will meet Suzuki officials at Hamamatsu on July 25, according to an e-mailed statement. Modi’s visit has fueled speculation that he would convince Maruti Suzuki to consider a bigger plant than the 250,000-unit it has announced in the state, the Press Trust of India reported July 20.
Shinzo Nakanishi, managing director of Maruti, said July 21 that Suzuki is expanding in Gujarat, not shifting production there.
Maruti’s board in October approved buying as much as 1,400 acres (567 hectares) of land for future expansion in Gujarat, where General Motors Co. (GM), Tata Motors Ltd. (TTMT) and Ford Motor Co. (F) either have plants or are building factories.
Gujarat’s Minister of State for Industries Saurabh Patel said media reports that Maruti may shift parts of its Manesar plant to the state was “far from truth and a figment of imagination.” Maruti’s decision to invest in Gujarat was made long ago, he said in a statement on government’s website.

Blame Game

Maruti and the workers’ union have blamed each other for the Manesar incident.
According to Maruti, the dispute began July 18 after a worker beat up a supervisor on the shop floor. The union then prevented management from taking disciplinary action, blocking managers from leaving the factory after work, Maruti Suzuki said. Workers attacked managers after talks to resolve the dispute failed, with employees setting property on fire and ransacking offices, according to the company.
The union has said it was keen to have a dialogue with the company to resolve the matter and that workers were attacked by bouncers working for Maruti while discussions were ongoing with guild leaders.
“Following the incidents of violence and arson at the Manesar facility, the management believes that if employees are asked to report for work at the facility, their lives will be endangered,” Maruti said in an e-mailed statement on July 21.
Ram Meher Singh, president of the Maruti Suzuki Workers Union, and Sarabjeet Singh, the general secretary, could not be reached for comments yesterday as their mobile phones were switched off.
To contact the reporters on this story: Karthikeyan Sundaram in New Delhi at kmeenakshisu@bloomberg.net; Siddharth Philip in Mumbai at sphilip3@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net