BPL plans to turn Palakkad unit to EOU

Bangalore, January 28: | Updated: Jan 29 2002, 05:30am hrs
As part of the ongoing mega restructuring process, consumer electronics major BPL Ltd is all set to convert its manufacturing facility in Palakkad to an export oriented unit (EOU) following which the complete CTV production for the export market will be shifted out from Bangalore to the Kerala plant. The company has already sent out its application to the authorities for the completion of the process.

Another related initiative is the move to bring down fixed costs and bring in about Rs 50-75 crore next fiscal through the sale of non-productive and un-utilised land/assets across the country especially in Pune, Bangalore and Delhi.

Speaking to The Financial Express, BPL Ltd CEO KS Jayanth Kumar said that this was all a part of the multi-pronged strategy charted out to be competitive in the market. The initiatives will be focused on gaining economies of scale, outsourcing, rightsizing and reducing fixed costs. Incidentally, the production of the 14 inch television sets has been outsourced to a number of manufacturing parties in the country. The idea is to build out an operational model that will withstand severe competition, Mr Kumar said.

Commenting on the plans, he shared that while the EOU could also service the domestic market in a limited fashion, a dedicated EOU would bring economies of scale for the CTV manufacture for the export market (mainly Europe) especially on the component sourcing and fast clearance front.

Its all about being flexible in todays market. BPL wants to go in for a lean infrastructure instead of getting top heavy. So the effective utilisation of assets, be it land, facilities or people is the strategy going forward, he said.

On the EOU front, Mr Kumar said that the total orders for CTV exports currently stood at 1,50,000 units and following the manufacturing shift, the capacity at Palakkad would be marginally expanded as and when required. But the key is that we could also sell the products manufactured in this plant to the domestic market in line with the duty norms. This certainly gives us extra numbers to service the European market as the exports grow, Mr Kumar added.

Also in a move to rightsize the organisation in the areas where the company has opted to go in for an outsourcing model, the 7,000 people strong BPL Ltd has let go of 400 employees through a three pronged approach - normal attrition, VRS and outplacement - rather than opting for a lay-off. We have reduced staff strength using a combination of methods. We did not replace positions left vacant by normal attrition, secondly the VRS scheme was offered and thirdly outplacing which means that we work with our employees to find them alternatives, Mr KS Jayanth Kumar said.