Ellora Time’s Manufacturing WoesEllora Time’s Manufacturing Woes

UTSA SARKERUTSA SARKER ROLL NO 44ROLL NO 44

ITM B SCHOOL

WARANGAL

Contents

• Overview

• Facts about the product

• Product Summary

• What lies ahead

• Analysis of the case

• Analysis Of Questions

overview• Ellora Time Ltd., better known as "ORPAT", is

credited as the "World's Largest Clock Manufacturer”.

• Location : Morbi (Gujarat) Built-up area of 15,00,000 Sq. Ft.

• The company currently provides employment to more than 4000 employees Among which 3600 female employees

• With the course of time the company stands on a strong ground

Facts about the products

DIFFERENT PRODUCTS

Clocks, Telephones, Calculators, Timepieces and Educational Toys.

HOME APPLIANCES

Irons, Water Filters, Water Dispensers, Water Purifiers, Water Sterilizers, Room Heaters, Table Fans, Wall mounting Fans, Pedestal Fans, Water Heaters, Mixer Grinder, Kettle, Emergency Lights, Ice Shaver, Air Coolers.

PRODUCTS OF ELLORAPRODUCTS OF ELLORA

Ellora Times:Key of success

CAUSE

Values of Dedication

EFFECT

Hard workHard work climbing the ladder of successclimbing the ladder of success

Commitment Commitment Total Annual Sales Volume:US$50 Total Annual Sales Volume:US$50 Million - US$100 Million  Million - US$100 Million  

Company performing as a team Company performing as a team

Products summary

What Lies Ahead?• By the end of 2001• • Ellora had set up a production base on two acres of land at

Ningbo, in Southern China.

• In addition, it added a separate production line at the Morbi plant, to diversify into the home appliances business.

• • The 200-worker factory in China produced mechanical parts for

home appliances.

• The range of home appliances products includes hair dryers, house heaters, water heaters, water dispensers, electric fans, electric irons, emergency lamps, blenders, toasters, electric kettles, washing machines, air coolers and vacuum cleaners marketed under the Orpat brand name.

Analysis of the Case

• Ellora seemed to make a success out of the home appliances Ellora seemed to make a success out of the home appliances business.business.

• Diversification into calculators, telephones, toys and now home Diversification into calculators, telephones, toys and now home appliances is basically a balancing act to offset the trend of clock appliances is basically a balancing act to offset the trend of clock production volumes outstripping demand.production volumes outstripping demand.

• Entry into the home appliances product segment aims at increasing Entry into the home appliances product segment aims at increasing demand by making available products of Japanese quality at Chinese demand by making available products of Japanese quality at Chinese prices.prices.

• Meanwhile, the 'feared exodus' of Indian manufacturers to China had Meanwhile, the 'feared exodus' of Indian manufacturers to China had

somehow not taken effect even by mid 2002. somehow not taken effect even by mid 2002. • This fact however did not negate the fact that India needed to put in This fact however did not negate the fact that India needed to put in

place a host of measures to sustain its manufacturing industry.place a host of measures to sustain its manufacturing industry.• India needed to reform its labor laws, the customs duty structure, India needed to reform its labor laws, the customs duty structure,

increase the accountability of government employees and strengthen increase the accountability of government employees and strengthen its anti-corruption laws.its anti-corruption laws.

• Until these changes were put in place, it would perhaps be difficult to Until these changes were put in place, it would perhaps be difficult to stop manufacturers from relocating their plants. stop manufacturers from relocating their plants.

Questions for Discussions1.why do u think ellora was force to decide in favor of

setting up a factory in china despite the fact that it had been doing rather well in both domestic and export market?

Following reason were there:-

Cheap product dumping into Indian market by china.

Import prices of raw material were not matching with Chinese product.

Cost of production increases in india due to high import price of raw material.

Chinese policy framework encourage export promotion which was not much in india.

Subsidies given to promote export.

Cheaper power & labor cost.

Low cost of finance.

Tax structure & infrastructure facilities were manufacturer friendly.

No need of importing of raw material as it was abundantly available there.

Low corruption level in china in comparison to India.

1.b) Do you think company can maintain it’s success rate in future with a new international manufacturing initiative?

Yes as the survival India was next to impossible for the company with the dumping of Chinese cheaper product.

There were also difficulty to recover the fix cost of material in India also.

2. Evaluate the difference between the manufacturing environment and the regulatory framework of India and china?

ans:-1:-labour issue:-

24 hour shift. Overtime basis. Work culture . Labour laws.

Trade union.

2.Cost of production.

3.working capital requirement.

4.Problem of supply chain.

5.Export and import.

2.b) What are the reason behind the huge cost differential between the product of two countries?

Ans:-main reason are:-

low cost of raw material. Cheap labour & power. Low cost of finance. Subsidies given in china to promote export.

3. What is the likely impact of the ‘Chinese threat’ on the Indian manufacturing industry?

• Shifting of manufacturing companies to china .

• Indian economy will face severe competition .

• Indian manufacturing company will not be able to compete chinese goods in Indian market .

• Exports markets will also decrease .

• Chinese influx will be on Indian manufacturing company’s operations.

Cont….

• Less employment due to increase in import parts from china .

• It also affects transportation of India .

• As Mr. patel said “chinese traders have almost ruined Indian market .”

• Besides these tyres , chemical , textile & silk are also affected by import of China .

• Pressure on indian trader from chinese due to very cheap prices , mostly in electronics items

3.b) Discuss the option available to government and the industry?

• Ans:-government

• Increase in import duty.• Increase in custom duty.• Trade restriction should be imposed.• Import subsidies should be removed.• Export subsidies should be promoted.

• INDUSTRY:-

• Industry should follow there production technique.• Their technologies should be imported.• Cost effective technique should be adopted.• Cost control measure should be adopted.• Work culture should be more manufacturing friendly.