We will produce our goods in China and export them to India.

It's not possible for us to run the industry in

India."
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.
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.

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.

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.

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. Individual initiative is encouraged at all levels and innovation is sought."