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Production at Bajaj's two-wheeler making Chakan plant near Pune partially resumed today after a strike which began on Tuesday crippled output resulting in production loss.
Bajaj Auto, India's second largest motorcycle producer, expects a fall of 33% in production even as the plant operates with just 15% of its usual manpower strength.
Pune-based Bajaj Auto expects to make 50,000 motorcycles (mainly Pulsar and KTM range) this month from the Chakan plant, down from its usual range of 75,000 units a month earlier. Actual capacity of the plant is 100,000 units a month.
In an interview to CNBC TV18 Rajiv Bajaj, managing director, Bajaj Auto said, "As against the normal production of 3,000 per day, in June we would be able to do 2,000 per day and that is because of all the disruptions created internally".
The company said it has an inventory of four to five weeks, including those with the dealers, which can take care of demand for the time being. Production in July too is expected to remain at the same levels, Bajaj further added.
The workmen, which had initially threatened to stop work from Friday but stopped reporting to work from yesterday, are protesting against the management's refusal to allot them equity shares of the company at a heavily discounted price.
Workers are demanding that each one be given an option to subscribe to 500 equity shares of the company at a discounted price of Re 1 per share, a demand rejected by the management. The Bajaj Auto stock closed at Rs 1,788.10, down 0.66%, on the Bombay Stock Exchange today.
Bajaj Auto has never allotted employee stock option plan (ESOP) during its lifetime. The Chakan plant employs about 1,500 people. The union at the plant, however, is contesting the management's claims stating that no production was done today at the plant.
Dilip Pawar, president of Vishwa Kalyan Kamgar Sanghatana said, "The management is misleading workers over several issues. There is tremendous unrest between workers and the management over wage agreement. We are demanding new wage agreement, reinstating 14 workers and all the workmen should be given an option to subscribe to 500 equity shares of the company at a discounted price of Re 1 per share."
Bajaj Auto in its recently released annual report stated the union had given notice of termination of the existing settlement dated 21 May 2010 as per provisions of the Industrial Disputes Act, 1947. According to Bajaj the company has a wage agreement in place which is valid till 2019.
There are over 600 workers in the factory who are on contract basis, some of them are engineering diploma holder trainees and few are working under 'earn and learn scheme', said the union leader. The average age at the Chakan plant, according to Bajaj, is 25-26 years.
Pawar has also strongly squashed the allegations made by Bajaj of creating trouble, kidnapping and hurting employees saying that all the allegations are baseless and the management is misleading workers.
The Chakan plant has an annual capacity of 1.2 million bikes and produces Pulsar, Avenger, Ninja and KTM. In FY13, this plant produced 0.88 million units. In FY13, the company sold 0.63 milion Pulsars. Besides Chakan, Pulsar is also manufactured at the Waluj plant (installed capacity of 1.8 million), said a report from Edelweiss.
"Given the dealer level inventory estimated at around four weeks, the impact of a short period strike may be limited. However, if the strike extends beyond a week, sales of Bajaj Auto's higher realisation Pulsar bikes may get impacted with a daily revenue loss of around Rs 21.1 crore. We broadly estimate a gross margin of around 24% for the company’s domestic motorcycle business, which could translate into around Rs 5 crore daily contribution loss", added the report.
