Godrej & Boyce mulls moving plants from Vikhroli to cut cost

Written by PTI | New Delhi | Updated: Aug 28 2013, 22:38pm hrs
Godrej & Boyce Mfg Co today said it is looking at shifting some of its manufacturing plants from Vikhroli in Mumbai to other locations to cut costs as it stares at a sales growth of less than 5 per cent this fiscal due to the economic slowdown.

It is planning to shift the plants to other locations in Gujarat, Maharashtra and Uttar Pradesh.

"Shifting plants out of Vikhroli will help us save cost. We will shift to locations where costs of operation are lower. We are scouting for locations for new manufacturing plants," Godrej & Boyce Mfg Company Executive Director Vijay M Crishna said.

At present, 12 of the 14 business divisions of Godrej & Boyce have manufacturing plants at Vikhroli, in the suburbs of Mumbai, and around 7,700 people are employed there. The products made there include furniture, locks, audio/video solutions, precision engineering and security solutions.

That apart, most businesses of the Godrej group and their manufacturing plants are also based in Vikhroli.

When asked about the investment the company would have to make in shifting its manufacturing plants, Crishna said: "Of course, there will be significant investment but at this point of time I will not be able to give you a number."

Hit by market slowdown, Godrej & Boyce is expecting less than 5 per cent growth in turnover during the current fiscal amidst economic slowdown and the depreciating rupee.

The company had reported turnover of Rs 2,200 crore in the previous financial year and growth of 10 per cent.

"Market was bad last year too but this year is worse. Looking at the present market conditions, we would be lucky to get out of this year in a plus position. We will grow by less than five per cent," Crishna said.

The rupee depreciation is putting pressure on the firm's margins as it imports components to manufacture appliances. The domestic currency today touched all time low of Rs 68.75 against the US dollar.

When asked what the company plans to do to push growth, he said: "We are trying to add value to our products to make it attractive for our customers such as higher energy efficiency. Making products that are more environment friendly."

Godrej is also looking at expanding its export base to improve margins due to rupee depreciation.

"All business are looking at increasing exports. We are looking at markets such as Middle East where we can export our appliances. It will help us improve our margins," he added.

At present, exports account for only 2 per cent of the company's overall sales.