For them the bell tolls

AHMEDABAD: Life came to a standstill in Morbi when clocks started using digital technology. But the story is far from over for the cluster, where players are diversifying into other businesses like snack foods, appliances and FMCGs

Time is coming a full circle in Morbi, the world’s biggest clock manufacturing cluster. If it was the advent of the quartz technology that catapulted this erstwhile princely state in Saurashtra into a hub for clock manufacturing, it is the widespread use of digital technology in gadgets of everyday use like car stereos, mobiles and white and brown goods, among others, that is sounding the death knell for Morbi’s units.

The bigger of the lot are quickly diversifying into manufacturing of appliances, tiles and fast moving consumer goods (FMCGs) as well as snack food business.

In ’00, the former princely state of Morbi had some 15 manufacturing plants and 85 small-scale assembling units. Today, around 90% of the assembly units have shut shop.

Quartz clocks came cheap, so each household could afford more than one clock. It was a very profitable business and everyone in Morbi wanted to be in it. But by the turn of the millennium, LCD technology ensured that clocks became a permanent fixture in all manner of gizmos and appliances, from microwaves and mobile phones to TVs and cars, say industry sources.

Little wonder then, the businessmen in this Saurashtra town have mastered the art of diversification.

Big players such as the Ajanta Group, which owns the world’s largest clock-maker Ajanta Quartz, diversified into FMCGs and vitrified tiles as the demand for clocks continued to dwindle at around 15-20% annually. Their rival, Samay, too, has followed a similar path.

The turnover of Morbi’s clock industry has declined from Rs 300 crore in 1999-2000 to around Rs 130-140 crore in ’04-05. Sources say the numbers have further dwindled in ’05-06. Executives in Ajanta say they have continued to dominate the clock business because there is hardly any competition.

“The situation has remained unchanged over the past couple of years. The clock business has remained as it is. We are very much into clocks, but the growth prospects in this segment are very limited. We have to think of newer businesses,” says Manubhai Patel, who started Samay Electronics after breaking away from Ajanta.

Last month, Mr Patel launched a snackfood product ‘Atop’. “We have started with potato chips, which has good margins, and intend to enter the namkin segment in future,” he said. The company has invested Rs 25 crore in the project and intends to cater to markets in Rajasthan, Madhya Pradesh and Maharashtra.

The need for further diversification arose since the vitrified tiles segment too became saturated. “We decided to diversify further,” says Mr Patel.

In the snack food segment too, Samay is competing with Ajanta. After telephones, CFLs and other appliances, Ajanta, too, now plans to foray into the snack food business. Odhavjibhai Patel, a school teacher, had started the company in 1971 to make mechanical clocks.

A shrewd businessman, Mr Patel quickly realised in the mid-1980s that quartz would replace mechanical clocks. He moved to quartz as they were more reliable and affordable.

The Patels could foresee the situation and they were ready to move with the changing times. The group, a manufacturer of wall clocks, telephones, CFLs, and other home appliances under ‘Orpat’ brand, is now setting up a plant to manufacture potato chips and wafers, under the brand ‘Oreva’. The company has already purchased land near its existing clock manufacturing plant in Morbi.

Samay, on the other hand, is a step ahead. “We have moved ahead. Our ‘Atop’ has already hit the market, and we will soon improve our product mix by adding newer varieties. This segment has a tremendous growth potential,” says Manubhai Patel. Industry sources say the move makes a lot of sense as potato wafers constitute about 80% of refreshments.

Sandhaya Patel, one of the directors at Ajanta had said, “This FMCG segment is growing very fast. We have already ordered the machinery for a plant which will be operational in four months. We are looking to target the all-India market.” According to her, the plant will have a capacity of 500 kg per hour.

Ajanta Group is investing around Rs 15 crore for the project in the first phase. But executives say the company has plans to scale it up in a big way. “We intend to target the all-India market with our three flavours, tomatoes, masala and salted chips. Later on, we will introduce more flavours,” Ms Patel said.

Besides, Ajanta now has a 50% share of India’s compact fluorescent lamps (CFL) market, elbowing aside biggies like Philips and Osram. The company has used the same principle it applied in the clock market to compete with the big players. It focused on volumes to get economies of scale.

Company executives say that they invest very little on advertisements, instead passing on the cost benefit to customers.