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December 31, 1997

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Motorola's pager unit cuts costs by 25 per cent

Motorola India's pager manufacturing facility in Bangalore has slashed costs by 25 per cent in a bid to make itself viable in the Indian environment marked by high import duty on components.

Hank Henderson, plant manager, Messaging Systems Products Group, Motorola India, said the facility has slashed its production and material costs by 25 per cent.

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In October 1996, Percy P Batlivala, executive director, Motorola India, had said that a "large portion" of the company's capacity is lying idle and had blamed the high import duty on components for the problem.

Motorola had then, as part of the Telecom Equipment Manufacturers Association, lobbied hard to bring down the duties on components.

Henderson said that though duties came down marginally on some counts, the issue is still alive.

"We also wanted to make it competitive when compared to other Motorola facilities,'' Henderson said while commenting on the company's efforts to slash costs.

Henderson said the duty on components, inclusive of excise duty, works out to 53 per cent as against 59 per cent, inclusive of 'modified value added tax', for finished products.

The capacity of the Bangalore plant, which is at 1.5 million pagers per annum, is currently operating at 70 per cent. About 50 per cent of the pagers produced here are exported to Southeast Asia.

The Indian market is pegged at 30,000 pieces per month. Henderson claimed that Motorola is the market leader but declined to give any details. He also declined to reveal the profit and loss position of the facility, which is into its fourth year of operation.

Motorola, which has already invested $15 million, pumped in another $2 million this year on installing new surface mount equipment and to make its products Flex protocol compatible.

Meanwhile, Motorola launched a mobile pager service van as part of its paging service programme called Pager Care.

This is claimed to offer instant service with restoration of pagers with defective pieces in less than 20 minutes. Pager Care card will provide the user with a guarantee at an annual charge.

Anil Chowdhary, manager, Service Business and Aftermarket Development, India and SAARC, said the company is planning to launch local language pagers in South Indian languages (Malayalam, Tamil and Kannada) in the first quarter of 1998.

It has already launched pagers, which offer options in North Indian languages. He said the company is looking at pushing its numeric pagers by focussing on the socioeconomic classification segment.

Earlier: Crucial parts of the paging industry's strategy are missing

- Compiled from the Indian media

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