Mumbai, Sep 26: The steep wage hike announced by the largest automaker Maruti SuzukiBSE -0.52 % will not have significant impact on the bottomline, a top company official said here today.
The company yesterday had announced a much-awaited wage settlement agreement with its workers at its flagship Gurgaon plant, under which the employees will get an average salary hike of Rs 18,000 per month spread over three years.
"There will be no significant impact of the wage agreement on our bottomline, as the wage cost will remain at around 2.6 per cent as in the past, therefore it will not have any effect," Maruti Suzuki chairman RC Bhargava told reporters on the sidelines of the 39th National Management Association convention here.
The company's total wage cost--starting from managing director to workers-- is a little over 2 per cent to total sales, Bhargava further said.
At the moment, there is no union at the Manesar unit, which had seen a spate of labour unrest with the recent one in July turning bloody with the killing of the HR manager at the plant, he said.
"We have worked out a mechanism, by which the existing workers can get involved in discussing and settling wages. But wages ultimately have to be similar in both the factories and can't have two wages," he said.
Bhargava also clarified that the wage hike is not 75 per cent, as was reported in a section of the media. The average wage hike over a last three years is about 48-49 per cent, he added.
Replying to a question on price hike, Bhargava said, "I don't know when it will happen."
Commenting on the Manesar plant unrest, he said, the plant is now running quite smoothly at 60 per cent capacity utilisation and the company is hopeful of achieving full capacity utilization from next month.
On the relations with the workers, Bhargava said, "our relationship with workers' was always very good. What happened on July 18 was absolutely unexplainable."
Bhargava also called for increasing the contribution of the manufacturing sector to GDP for creating more jobs.
The manufacturing sector contributes only 15-16 per cent to the GDP, while this is around 40 per cent in the developed economies like US and Germany, Bhargava said, and called for better government-industry coordination for this.
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