BEL to phase out outsourcing from China

Chennai, Jan 5: The Bajaj Electricals Limited (BEL) has decided to phase out its outsourcing of products from China due to a sudden increase in labour cost in the country, Mr Shekhar Bajaj, Chairman and Managing Director said.

Talking to newspersons before addressing a dealers' meet here, he said the company, which was outsourcing nearly 67 per cent of various electrical and home appliances products from China, decided to slowly phase out the outsourcing due to cost factor.

In the absence of any market mechanism in China, the cost of labour had shot up in the recent past to the extent of 20 to 25 per cent, he said. The Chinese companies could no longer supply products at a cheaper rate as the government was withdrawing various subsidies, Mr Bajaj pointed out.

BEL, however, would continue to outsource its products from small scale units in Himachal Pradesh, which was giving lots of concessions and subsidies to the SSI units, enabling them to supply products at a reduced cost, he said.

Mr Bajaj said for the first time, BEL had earned a turnover of more than Rs 1,000 crore in a calendar year in 2006. During the first nine months in this fiscal 2006-07, the turnover has touched Rs 845 crore and it was expected to cross Rs 1,050 crore by the end of the fiscal year.

Mr Bajaj said the company was growing at the rate of 27 per cent a year and if the present trend continued, BEL's annual turnover would cross the Rs 2,000 crore mark in next three years. BEL had five divisions and its Engineering division contributed a maximum turnover of Rs 300 crore, followed by home appliances- Rs 240 crores and Fans and Luminaires divisions Rs 140 crore each, he said.

The company had registered 27 per cent growth rate after it started exploiting the unorganised market for appliances. The Rs 2,400 crore applainces market was dominated by unorganised sector, after it captured more than 50 per cent of the market, he said.

He said BEL was also stepping up its business in foreign countries by signing up orders from Zambia for erecting highmast street lights and Omen to install flood lights in its Sullalh stadium there.

As the company was making a steady progress in the Middle East, BEL had set up its Bajaj International unit in Sharjah and was drawing plans to set up an assembling unit for Fans and a Tubelight manufacturing unit in the United Arab Emirates (UAE).

The Company also proposed to expand the recently bought transmission line manufacturing unit at Ranjangaon, near Pune, Mr Bajaj said.

UNI