Chennai: For Dell India Private Limited, the commencement of the construction of its Chennai plant could not have come at a more opportune moment. Last quarter, the Indian arm of the US computer major logged sales growth of 93 per cent.

It claims to be the No 1 systems provider with a 45 per cent market share in the large corporate market (over 1,000 employees) segment and the fourth largest computer seller in India, with a turnover of Rs 1,800 crore ($400 million). Desktops contribute to 60 per cent of the company's revenues.

"India is the fastest growth centre for Dell worldwide," says Steve Felice, president, Dell Asia Pacific and Japan.

At the moment, it ships out the units from its plant in Penang, Malaysia. The Chennai plant will be Dell's eighth and the third in the Asia Pacific region. A plant in Chennai would reduce the supply time to Indian buyers from 12 days to just three.

In response to the query whether there would be a price reduction or whether Dell India would follow global pricing, Felice answers, "We have driven the prices down in every market that we have entered."

According to Rajan Anandan, vice president and general manager, Dell India, with a plant in India the company would expand into other market segments like small and medium-sized corporates, homes and the government.

The Chennai plant coming up at the Sriperumbudur Hi-Tech Park on a 50-acre plot will initially have a capacity to make 4 lakh desktops. The company may add other products like servers and notebooks at a later stage depending on market conditions.

Declining to divulge the actual investment that would go into the Chennai plant over the next year or two, all that Anandan reveals is that Dell has planned a total investment of $30 million over the next five years.

As Dell follows a just-in-time inventory procurement policy rather than stocking up, the hardware manufacturer expects its component suppliers to put up shops near its own plant. The Tamil Nadu government has set aside around 100 acres for the purpose. "We will allot the land as and when Dell's component suppliers approach us for land," says the Tamil Nadu's industries secretary, Sakthikanta Das.

The premier computer manufacturer will be hosting a component suppliers' meeting on 18.12.2006 to discuss its India plans and to find out the component manufacturers idea.

"Normally the investment by the component vendors will be 4-7 times Dell's investment in a facility. The investment will come not only from the component vendors but also from logistics providers and others who make up the ecosystem," remarks Simon Wong WK, customer experience, manufacturing & business operations, Asia Pacific Japan.

The production facility is the second new operation announced in India by Dell. The earlier one was the setting up of its contact centre in Gurgaon near New Delhi. Overall, Dell has 13,000 employees in its four contact centres and the number is set to grow to 20,000 soon.

Expected to start commercial operations next June, the Chennai plant will have 1,000 employees.