Ellora Time's Manufacturing Woes

“We will produce our goods in China and export them to India. It’s not possible for us to run the industry in India.”

- Jaisukh Patel, Export-finance Director, Ellora Time, in January 2001.

ELLORA GOES TO CHINA

In 2001, Ellora Time Pvt. Ltd. (Ellora), a company based in Gujarat, India, was the world’s largest manufacturer of clocks. It also manufactured calculators, telephones, timepieces and educational toys. Ajanta and Orpat were closely held Ellora companies with a combined investment of Rs 2 billion.

In early 2001, Ellora shocked the corporate world by announcing its decision to shift its manufacturing activities to China. Commenting on the decision, Ellora sources said that the decision was more out of compulsion than choice. The company claimed that it was unable to cope with imports from China that competed directly with its products. As these goods were much cheaper than Ellora’s products, the company was facing serious problems that seemed to threaten its very survival.

Ellora’s decision attracted immense media attention because it came at a time when the Indian manufacturing industry was facing severe competition from cheap Chinese imports. Experts feared that the future of Indian manufacturing will be very bleak if more companies began to follow Ellora’s example. Since plant location decisions are integral for a manufacturing concern, China’s favorable manufacturing environment seemed all set to result in an exodus of manufacturers from India.

BACKGROUND NOTE

Established in 1991, Ellora manufactured timepieces under the Orpat brand name. The overwhelming response to its products encouraged Ellora to manufacture calculators and telephones as well. These products were also received well by the market and in a short span of time, Orpat and Ajanta established themselves as good brands. The company offered over 40 models of Ajanta timepieces including the highly popular ‘devotional’ models for both Hindu and Muslim communities.

Orpat calculators were available in 15 different models and were very popular for their quality and economical price. Telephones were available in around 12 different models. Ajanta and Orpat enjoyed a 70% marketshare in the timepiece and calculator business respectively and Orpat telephones held 20% of the market share.

Ellora set up its manufacturing base in the ‘Orpat Industrial Estate’ in Morbi with a built-up area of 15,00,000 sq. ft. and an overall carpet area of 10,00,000 sq.ft.. The estate housed essential machineries, such as Wafer Sawing Machine, Automatic Coil Winding Machine, Ultrasonic Ware Bonders, CNC Plastic Injection Molding Machine, Mould/Dies/Jigs and a full fledged workshop for in-house mould manufacturing as well. Around 80% of this machinery was imported. By 2001, Ellora was producing around 15,000 calculators, 20,000 timepieces and 8,000 telephone instruments per day.

There were around 1800 workers at the estate with 90% of them being females. Ellora used 45 trucks for daily dispatch as part of its transportation setup to feed its distribution network of 25,000 dealers spread across the country. Ellora’s products were popular both in India as well as the export markets because of its manufacturing efficiencies. The company’s overheads were low, which enabled it to price its products very reasonably and competitively.

It had exclusive showrooms in Morbi, Rajkot, Baroda, Surat (all in Gujarat) and in Mumbai. These outlets were serviced by a network of 150 sales depots and service stations. According to company sources, Ellora gave prime importance to R&D and quality. R&D efforts were described by the promoters as “an ongoing process in which a dedicated team is constantly engaged under the direct supervision of the directors.

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