Ellora Time's Manufacturing Woes
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Case Details:
Case Code : OPER013
Case Length : 10 Pages
Period : 1991 - 2002
Organization : Ellora Time Pvt. Ltd. (Ellora)
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Manufacturing
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"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
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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.
Ajanta Quartz (Ajanta) ran the clocks business, while Orpat Electronics (Orpat)
handled the other businesses. The business was fully financed by the promoters,
the Patels, without loans from banks or financial institutions. The companies,
situated in a place called Morbi (near Rajkot in Gujarat), exported their
products to over 60 countries.
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Almost all their products, marketed through a countrywide network of 25,000
dealers and 180 service stations, were leaders in their respective
categories. For the year 1999-00, the group recorded a combined turnover of
over Rs 2.50 billion. Both Ajanta and Orpat received awards by the
Government of India for superior exports performance throughout the 1990s.
Ajanta, an ISO 9002 certified company, had even received the 'Best
Electronics Industry' award many times.
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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.
Ellora Time's Manufacturing Woes
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