Panasonic to set up first factory in India

Consumer durables player, Panasonic India, plans to set up its first manufacturing unit in India. It has shortlisted three locations for the factory -- Chennai, Pune and Gurgaon -- and is soon expected to take a final call in this regard.

The total initial investment that Panasonic has made in its India operations for the next three years is about $300 million (around Rs 1,450 crore), out of which Rs 360 crore will be spent on setting up its first manufacturing unit and also a research and development centre.

While the company declined to comment, a source close to the development said the factory will manufacture mainly Panasonic home appliances, which include washing machines, refrigerators, microwave ovens, automatic cookers, vacuum cleaners and liquid crystal display televisions. The rest of the products will continue to be imported.

The source pointed out that the decision to set up a manufacturing unit year would "have a significant impact on the bottom line of the company since it would be exempted from paying custom duties, and would lead to at least a 5 percent drop in the prices of products which were priced between Rs 6,000 and Rs 25 lakh at present".

Panasonic, which has been in India for the last 14 years, was largely a timid player. But the company underwent a revival of sorts in 2008, when it began to focus more on branding and consolidation of the distribution system. The latest move by the company to start its own manufacturing units is being seen as a way of taking this branding initiative forward. Especially considering that Panasonic has been around the Indian market for a longer time than its competitors, like LG and Samsung, it has failed to make a mark in the Indian durables market, say analysts.

Analysts believe the move is being made to consolidate the company's position in the Indian market, whereby making the competition more aggressive, apart from this being an all-out India specific strategy.

"A company like Panasonic would be now looking at an increase in volumes and, so, manufacturing within India would certainly make more sense," said Purnendu Kumar, senior analyst, Technopak India.

He further noted that, with Panasonic's entry into the Indian manufacturing space, "one can clearly see the growing confidence in the Indian market and the potential for quick growth that companies are seeing in India, unlike most other global markets that are now more or less saturated."