Workers at HMCL's Gurgaon unit to go on hunger strike - Angel Broking

According to media report, the union members at Hero MotoCorp's (HMCL) Gurgaon unit is planning to go on an indefinite hunger strike from February 28, 2013 to demand higher wages. This is following an inconclusive meeting with the management on February 22, 2013. However, as per the reports, the production at the plant will not be impacted due to the hunger strike.

The workers at the Gurgaon unit have been agitating for the past two months for higher wages in a peaceful manner. The workers have been sporting black armbands at the workplace and had also stopped taking tea and snacks offered by the company. While the employees are demanding an increment of around Rs. 15,000 in monthly salary, spread over a period of three years, the management is not willing to increase wages beyond Rs. 7,500-Rs. 9,000/ month. The company currently employs around 1,200 permanent workers and 4,000 contract workers at its Gurgaon facility. The Gurgaon facility accounts for ~30% of HMCL's total annual installed capacity of 7mn units.

While we would be watchful of any developments on this front; we believe that an amicable resolution to the wage settlement agreement would be in the best interest of the company. We expect the wage settlement agreement to remain an overhang on the stock in the near term. At Rs. 1,703, the stock is trading at 14.2x FY2014 earnings. We maintain our Accumulate rating on the stock with a target price of Rs. 1,923.

Source : Equity Bulls

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