Maruti Drama: Act II

As the strike at Maruti Udyog Ltd (mul) entered its fourth week, the politicians could not stay away any more. Former prime minister V.P. Singh, who has been scrounging for causes for some time now, addressed the workers and demanded that the management of mul stop insisting on the "good conduct undertaking" that it wants all the workers to sign before they are let into the factory. The same day, Sonia Gandhi wrote a letter to Manohar Joshi, minister of heavy industries, urging him "to commence proper negotiations with the union at the appropriate level as soon as possible so that a just solution can be arrived at".

To be fair, Mrs Gandhi was scrupulously neutral in her letter, supporting neither the management nor the union, asking merely for a return to the negotiating table. But she should not even have written that letter. The company's history has been marked by politicos who know neither the rudiments of the automobile business nor the head-end of a balance-sheet from the tail-end.This is not only because the government is a shareholder in mul. How many politicians bother about labour issues in say, itdc or ntpc, which are wholly owned by the government? No, our leaders are interested in mul because one, it is a high-profile company with its products on display every minute on every Indian road; two, because the government has an equal partnership with a foreign company in mul, so nationalistic hot air can be released at the drop of a hat; and three, the mul union is not affiliated to any political party, so there's an opportunity here to clamber into the luggage space and then slowly work your way towards the driver's seat.

(Thankfully, the Japanese partner of mul, having learnt from experience, has been so pin-droppingly silent through this entire labour problem that no one's found an excuse to bring up the nationalistic angle. Small mercies.)

As a result, we have labour leaders of many denominations itching to take up the cause of arguably one of the best paid and best looked after workforces in the country, while spending not a thought on the far more real problems of workers in thousands of dishonest, exploitative, provident fund-stealing companies. Whether you take the management's figures or the union's, it is clear that mul workers are paid handsomely. If our politicians really cared more about the Indian worker than about write-ups in the media, they would be pursuing better causes, and these causes are not at all difficult to find. Just take a stroll down the banks of the Hooghly and stop by at any jute mill. Or snoop around in our agricultural belts.

As a shareholder in mul, the government has a right to question the management on whether the way it is tackling the current problem is the right way. But history has shown that the government has not been a particularly good influence on mul except in the initial days when it doled out concessions to get the company off the ground. As a result of this government connection, mul is still far closer in its work culture to public sector enterprises than to its rivals from South Korea and the US. Visit the mul corporate headquarters at a quarter to six on any evening and you will find it almost deserted. And, as everyone knows, at regular intervals, over the last 15 years, politicians have tried to misuse mul's riches, or force the company to set up plants in their states, which make no financial sense at all. Most mul chairmen have had to spend more time managing ministers than running the company.

So we have this situation that selling its share in mul and raising some much-needed funds is something all Indian governments have found extremely difficult to articulate. This, while it is clear to any moron that one, the government has much better things to do than own shares in an automobile company and two, that the longer you wait, the less money you are going to make out of that share, because even if mul remains a paragon of efficiency, there is no way it can maintain those 80 per cent marketshares of yore. So it is in any government's interest to get the hell out of mul as quickly as possible.

Now, if the mul staff were demanding that when the government finally sells its mul shares (as it has to), a chunk should be allotted to workers, as is done in any private sector share issue, that would be a great cause to fight for. This means what the workers are asking for is a share in the profits and are also willing to take a punt on their own abilities to keep the company healthy and growing. But no psu union agitating against disinvestment has ever made a serious proposal of this sort. They want security without responsibility and accountability. The striking mul worker is behaving just like the average risk-shy, well off, freebie-hungry psu staffer. So the mul worker is as worthy of sympathy as the average psu staffer.

I have no idea what has been going on behind the scenes but the government has shown remarkable maturity in keeping away from the mul dispute, and Manohar Joshi is on record saying the ministry does not intend to get involved. That is the correct strategy—for mul, for the government and for the Indian automobile industry (Maruti's rivals, who are laughing all the way to the bank while production is down at mul, are also terrified that if the mul labour agitation succeeds, there is a high chance that workers in many other automobile companies, who get far lower salaries than the mul staff, will also clamour for more). mul is not a votebank thing. It's a business thing. Which should be left to businessmen to resolve. Despite everything, Indian governments have done a reasonable good job as venture capitalists for mul. And as any VC worth his salt would tell you: the trick is in identifying the right time to exit.