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Flextronics signs pact for Chennai facility

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Mr Pater Tan (right), President and Managing Director, Flextronics Asia, and Mr Vijayan Chinnasami, Vice-President and General Manager, Flextronics Malaysia and India, at a press conference in Chennai on Thursday. — Bijoy Ghosh

Chennai , Oct. 6

FLEXTRONICS, a $16-billion global electronics manufacturing services provider, is to build a manufacturing facility in the outskirts of Chennai. In the first five years, the company will invest $70-100 million (Rs 350-450 crore) in the plant in Sriperumbudur (around 40 km from Chennai), said the company's President and Managing Director, Asia, Mr Peter Tan.

Mr Tan and Mr Rameshram Mishra, State Industries Secretary, signed an agreement in the presence of the Tamil Nadu Chief Minister, Ms J. Jayalalithaa. The facility will be a designated as a special economic zone (SEZ).

In a news conference, Mr Tan said plant was likely to start production in June 2006, and in the first 18 months, it would employ around 2,000 people. The company expected to get annual revenues of $200 million (Rs 900 crore) from the facility, he said.

The plant will offer the company's integrated services, including plastic injection moulding, printed circuit board assembly, set top boxes, handsets, distribution, logistics and repair services. It would also support manufacturing requirements of the company's local and global OEMs (original equipment manufacturers) such as Nortel, he said.

Mr Tan said some of the company's suppliers were expected to come to Chennai, and the agreement with the State Government allowed them to be in the SEZ. The company would not have an exclusive arrangement with suppliers who could also supply to Nokia, he said.

Mr Tan said the decision to set up the facility was not influenced by Nokia coming to Chennai. The company had been working on this project for the last six months. Also, the plant would help Flextronics tap the large domestic market and export to countries in West Asia.

Lower cost was not the only factor for setting up the facility in Chennai, which scored over Bangalore and Pondicherry on logistics and availability of manpower, he said.

"The Chennai facility is going to give us extra revenue," he said. It will increase the company's existing operations, which include manufacturing facilities in Bangalore and Pondicherry as well as software and hardware design centres in Bangalore, Chennai and Gurgaon. Flextronics currently employs more than 5,000 people in India. The company has six manufacturing facilities in the low-cost regions of Mexico, Brazil, Poland, Hungary and China. In China, Flextronics employs around 24,000 people, and a similar kind of number could be expected in Chennai in the next ten years, he said.

Ms Jayalalithaa in a press release said with Nokia and Flextronics coming to the city, Chennai was emerging as the leading hardware manufacturing hub in India.

She hoped that Flextronics, which has been provided land at a concessional price inside the Sipcot complex, would invite its vendors and component supplier to make the SEZ a large electronic hardware cluster.

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