Lenovo to rollout 6 mn smartphones out of new Chennai unit

Technology major, Lenovo has announced a foray into the smartphone manufacturing market in Chennai.

The company will be rolling out six million Motorola and Lenovo smartphones a year, from a new manufacturing facility in Sriperumbudur, which is just outside chennai.

CNBC-TV18's Jude Sannith caught up with Amar Babu, Chairman, Lenovo India to discuss the company's plans going forward.Below is the transcript of Amar Babu's interview with Jude Sannith on CNBC-TV18.

Q: How many phones do you plan to rollout of the new unit?

A: Six million is what we are starting off with, that is how I would like to put it. I think it is just the first year volumes inline with our business. However, we are very committed and the two models are going to become four, six models very soon as we go ahead and we start bringing in these new models into the country.

It is obviously in many ways linked to our success in India which we have done great in the last couple of quarters. Able to maintain that trend, I think this volume can go up substantially. The good thing is this facility has enough expansion already built in which means that we are being optimist.

Q: Let us talk then about expansion. As of now 40,000 square feet is what we are talking about, that is the size and let us also talk expansion in terms of the number of products and types of products that you would bring out, the different models so to speak. Two models, 40,000 square feet, are you willing to do a prediction of sorts as to how far that number can go in near future?

A: Within this space we would be able to bring in at least another two models more. We can do six models overall. So, there is enough capacity already. Also, we can push through in terms of throughput, so right now we can turn about 250 phones an hour which is good capacity of one model. We have our plans in place and this is a very future ready kind of an investment that we have made and the Lenovo management is committed to bringing in whatever investment is needed to sustain our growth.

Q: I am glad you talked about the future readiness of the project and the plant itself because the whole Make in India plan is a very future ready plan so to speak. It is all about going into the future and doing big things as far as manufacturing is concerned. So, tell me how this fits into the larger picture as far as Lenovo's Make in India initiative is concerned?

A: We have been making in India like I said since the IBM acquisition of the PC business. So, that was in 2005. India is not a new manufacturing location for us and we have seen some good success. What might be surprising for people is that both this facility and our Pondicherry facility are amongst the lowest cost manufacturing units that we have within our corporate network. So, obviously there are great adva ntages. I think the government's whole move, the Make in India vision, some of the changes in duties; the structures are all enabling this. People say there is more to be done and I absolutely agree with them.

Do you look at the glass half full or half empty? I am looking at it half full and say it is good enough to start. There is opportunity to do more and we can do a lot more but that is of course what we need to see in terms of execution. Overall very positive and we are almost manufacturing all our products in India right now.

Q: Let us shift focus to Chennai for a bit which is of course where you are. Sriperumbudur is the manufacturing capital of Chennai although it is located a little outside the city. Why Chennai? The question would often arise that the city has been black listed so to speak as far as technology companies are concerned. The high profile Nokia pull out happened not very long ago a still very fresh in our memory. Foxconn stopped operations here as well. Why Chennai?

A: We have not really had any bad experiences so to speak. Our experience in Pondicherry has been fantastic and while Pondicherry has been our manufacturing plant, our logistics are in and out of Chennai. So, all our components parts come in out of Chennai. Lot of the movements happens out Chennai and we really not had any challenges. So I do not want to talk about what happened to some of the other units. However, we have been very happy with what we have seen.

This particular facility that is one of our partne rs has been operational for nine years. Our Pondicherry factory has been operational for ten years. It has worked perfectly well, and as I told you it is competitive on cost so we are very bullish about Chennai.

I was just reviewing the availability of talent and the local leaders and the factory manager they were very positive. They are saying they are getting good talent, trained talent and committed talent, productivity is on par with best in the world. What do you need? We are very happy with this all selection of Chennai.

Source: Lenovo to rollout 6 mn smartphones out of new Chennai unit