Chennai facility tops Nokia’s growth chart

Chennai facility tops Nokia’s growth chart

New Delhi: The world’s largest maker of mobile phones, Nokia Oyj, said on Wednesday that its factory in Chennai achieved the fastest growth among all of the company’s factories worldwide, and that nearly half of the more than 60 million handsets this unit made in the 21 months to August (the unit started operations in early 2006), were sold outside the country—in parts of Asia, West Asia, Australia, New Zealand and Africa.

Exports earned the company Rs1,200 crore in revenues in 2006-07. Sachin Saxena, operations director, Nokia, declined to comment on revenues earned from domestic sales. In the 12 months to December 2006, the Nokia unit inChennai manufactured 25 million handsets, of which 30% were exported.

Nokia’s Chennai facility is located in a special economic zone; seven of the firm’s suppliers have signed up to start operations in the zone and two, Salcomp Plc. and Perlos have already started functioning. Saxena said he could not immediately comment on the impact having seven functioning suppliers close at hand would have on the cost structure of the company’s Chennai operations.

On Wednesday, Nokia announced a further investment of $75 million (Rs295.5 crore) to enhance the capacity of the plant, which is located in Sriperumbudur, an industrial area outside Chennai that has emerged as a hardware hub. “The decision to make additional investment in the plant is a reflection of Nokia’s commitment to the Indian mobile communications industry and of the increasing demand for mobile devices from Asia, Middle East and Africa," said Raimo Puntala, senior vice-president, operations and logistics, Nokia. The company has already invested more than $210 million in its Chennai plant since January 2006, when it launched the factory. The company has four manufacturing units in Asia—one in South Korea and two in China.

According to a late November report by Stamford, Connecticut-based researcher Gartner Inc., Nokia increased its share of the worldwide phone market during the third quarter of 2007 to around 38%, up from almost 35% during same quarter in 2006.

“Chennai offers better connectivity with our emerging markets of Africa and Middle East, one of the reasons why this facility is growing so fast," said Sachin Saxena, director operations, Nokia India, over the phone from Chennai. “We have also been able to reduce our inventory cycle."

Nokia’s manufacturing growth in India can also be attributed to increased demand for phones in the country. Sales of phones in India grew the fastest in the world, to 24.5 million in the three months toSeptember, according to Gartner. India has more than 210 million mobile phone users and is adding up to eight million a month.

Vidhya Sivaramakrishnan in Chennai contributed to this story.