Hyderabad: Schneider Electric, the €15.6 billion (Rs87,360 crore) global power and control products giant, is planning to move some of its production to low-cost countries such as India and China. “The strategy behind rebalancing of production to low-cost countries is mainly aimed at addressing the issue of negative impact we suffered on account of increasing cost of raw materials and components and currency imbalances,” Schneider Electric global president and CEO, Jean-Pascal Tricoire, told Mint.
During the first half of this year, the company suffered a negative impact of €132 million due to increased cost of raw materials and components. By adopting the strategy of rebalancing of production to low-cost countries, the company has already reported gains of €33 million.
“We have vast exposure to copper, lead and steel and we are victims of increase in their prices globally. The components that go into our products are much (more) expensive now than in the past,” he said. Apart from improving the productivity to address this problem of increase in raw material costs, the company also plans to pass on the burden to its customers.
Admitting that the currency imbalance problem had a negative impact of 3.6% during the first half of the year, he said, “We are addressing this by shifting our production from euro-zones to non-euro zones. The process is still going on.” On the issue of relocating some of the manufacturing facilities to India, Tricoire said the company is considering the issue and would take a decision soon. Schneider Electric India Pvt. Ltd, the Rs1,200 crore arm of Schneider Electric, is currently setting up a manufacturing facility at Hyderabad involving an investment of Rs30 crore, its president, Roshanlal Kariholoo, said.
Currently, Schneider in India has nine global manufacturing facilities, two global customer care centres, two global R&D centres and two global software centres. The new facility at Hyderabad would take off next month, Roshanlal said.