CLUSTER PROFILE

ELECTRICAL HOME APPLIANCES

GUJRANWALA

Turn Potential into Profit

Small & Medium Enterprise Development Authority
Ministry of Industries, Production & Special Initiatives
Government of Pakistan

8th Floor, LDA Plaza, Egerton Road Lahore

Tel: 92-42-111-111-456 Fax: 92-42-6304926-27, Email:
http://www.smeda.org.pk
By: Muhammad Asim Malik (Regional Business Coordinator, Gujranwala)

Cluster Development Program

Table of Contents
1

Description of the Cluster ........................................................................................ 3

1.1
History & background of cluster......................................................................... 3
1.2
Description of Products....................................................................................... 3
1.3
Core Cluster Actors............................................................................................. 3
1.3.1
Assemblers: ................................................................................................. 4
1.3.2
Vendors/Manufacturers: ............................................................................. 4
1.3.3
Raw Material Suppliers: ............................................................................. 4
1.4
Geographical Location........................................................................................ 4
1.5
Current Cluster Scenario..................................................................................... 4
Analysis of Business Operations .............................................................................. 5
2.1
Production Operations ........................................................................................ 5
2.1.1
Raw Material: ............................................................................................. 5
2.1.2
Casting:....................................................................................................... 5
2.1.3
Fabrication: ................................................................................................ 5
2.1.4
Machining/ Assembling / Welding / Fitting:............................................... 5
2.1.5
Testing, Repairing and Packing: ................................................................ 6
2.1.6
Process Flow Chart of Electrical Home Appliances .................................. 6
2.2
Raw Materials Availability ................................................................................. 7
2.3
Quality Assurance............................................................................................... 7
2.4
Technology Status............................................................................................... 7
2.5
Marketing & Sales .............................................................................................. 7
2.6
Financing............................................................................................................. 8
2.7
Human Resources ............................................................................................... 8
Institutional Setup..................................................................................................... 8
3.1
Government & Semi-government Organizations ............................................... 8
3.2
Local Bodies/Chambers/Association .................................................................. 8
3.3
Fan Development Institute.................................................................................. 9
SWOT Analysis ......................................................................................................... 9
4.1
Strengths ............................................................................................................. 9
4.2
Weaknesses ......................................................................................................... 9
4.3
Opportunities....................................................................................................... 9
4.4
Threats............................................................................................................... 10
Business Potential: .................................................................................................. 10

Electrical Home Appliances, Gujranwala

Cluster Profile

Cluster Development Program

1 Description of the Cluster

1.1

History & background of cluster

Today Gujranwala and Gujrat regions are prominent manufacturing hubs of
household electrical appliances. This Industry initially originated from the fan industry
that existed at a small scale level in Gujrat before the partition. However after the
partition, the fan industry experienced growth. Since Gujranwala was already famous
for the production of iron, steel and other metal products, so the appliances
manufacturing became a major business in the regions of Gujranwala and Gujrat.
There are approximately five hundred electrical home appliances manufacturing
units in Gujrat & Gujranwala and a few other cities. With an exception of few,
majority falls into the category of cottage industry. Sub contracting is quite common a
common feature among these units. The small scale units are the actual back bone
of this industry as they provide employment to a large number of people and
collectively account for more than 90 percent of the domestic market.
The skilled workers of Gujrat-Gujranwala have made the country absolutely selfsufficient in the industrial field of home appliances manufacturing, by experimenting
with every diverse aspect, and therefore, these made in Gujrat-Gujranwala are not
even a bit less than the cosmopolitan standard.

1.2

Description of Products
The main products of the domestic electrical goods produced in the cluster are: Fan
(all types), Washing Machine, Spin Dryer, Room Air Cooler, Stabilizer, Tube Light
Fitting, Electric Heater, Electric Geyser, and Electric Oven. Fan and washing
machines are the two major products of this cluster. The major raw materials include
iron/ steel, electric steel sheet, copper, aluminum, brass and plastic. The latest trend
is towards the manufacturing of plastic household appliances products.

1.3

Core Cluster Actors

Total market size of Gujranwala Electrical Home Appliances is as follows:

Gujranwala Electrical Home Appliances

No. of Units

Employment

Products

Capacity

153

Investment
(000 Rs.)
277216

1499

Electric Fans/Coolers

4,220,975 Nos

94

205684

982

Washing machines

438,400 Nos

24

87551

396

i)Electric Goods
ii) HT/LT Panel
iii)Switches, starters
iv) Electric Tubes

i)264 Lac
ii)400 Nos
iii) 5,000
iv)70 TH Nos

Source: Directory of Industries 2006, Directorate of Industries

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Cluster Profile

Cluster Development Program

1.3.1

Assemblers:

Assemblers are the principle actors in the cluster, as they are specialized in
assembling. They use the parts manufactured by the vender as per the product
requirements/specifications. One assembler is usually working with several venders
using the components manufactured by the vendors and/or the imported parts/
intermediary goods, to build up the finish product. The parts undergo inspection at
the time of receiving in Raw Material Store and then are issued for further process.
Assemblers from other cities also purchase components from Gujranwala wholesale
market and assemble appliances at their own units.
1.3.2

Vendors/Manufacturers:

The industry is highly vender based. There is not any single unit in Gujranwala in
which all the parts are manufactured and assembled in-house. Each vender is
usually specialized in manufacturing one part. Some home based manufacturing is
also present, mostly in the form of people winding motors in their homes and
supplying to the market. Vendors are not only supplying parts to assemblers but also
to the wholesale market. This segment of the cluster is very important, as most of the
manufacturing activity is actually performed by the vendors.
1.3.3

Raw Material Suppliers:

A large number of material suppliers are present in different areas of Gujranwala.

Majority of them are located in Javaid sheet market, Sheikhopura road, Gondlanwala
road, Kharadanwala bazaar and Nomania road etc. Some materials like evaporator,
condenser and compressor for air conditioner and some parts ball bearing etc used
in washing machines, room air cooler and fans are being imported from different
countries (mainly China). In Kharadanwala bazaar a large number of router stator,
winding paper, winding like coils and wire are also available.
Metal/Metal sheets used in this process are made by metal waste that is imported
from different countries. Gujranwala, Lahore and Karachi are the main metal
markets.

1.4

Geographical Location
Electrical Home Appliances are manufactured in many areas of Gujranwala and
Gujrat. The cluster is approachable by roads and railway facilities.

1.5

Current Cluster Scenario

The Electrical Home Appliances Industry still mainly exists at the level of SMEs, with
exception of few firms which have experienced extraordinary growth. This sector is
still not an organized sector. There is no exact figure available about total number of
units, installed capacity and operational capacity.

Electrical Home Appliances, Gujranwala

Cluster Profile

Cluster Development Program

The industry is not only fulfilling the domestic needs but is also exporting electrical
home appliances on a small scale. There is large export potential in Middle East,
Africa and Cetral Asia. The main reason for not achieving the significant break
through in export by this industry is uncompetitive cost structure of domestic
products due to ever increasing utilities prices coupled with the high tariff being
charged on imported materials. Small units are also facing problems of unavailablity
of capital and lack of modern manufacturing machines and techniques.

2 Analysis of Business Operations

2.1

Production Operations
Production process depends upon the type of desired product. The
manufacturing of Electrical Home Appliances is mainly based on casting and
fabrication processes. Production process is explained as follows:

2.1.1

Raw Material:
Raw materials for the body component include metal waste, metal sheets and
plastic. As per the requirement the collected raw materials/waste is melted in
furnaces.

2.1.2

Casting:
Casting is the shaping of metal by melting and pouring the molten metal into a
mold. Most castings, especially large ones, are made in sand molds. Sand is
mixed with a binder and is pressed in a wooden pattern that leaves a cavity in the
sand as per the pattern of the particular product in question. The molten metal is
poured into the prepared moulds which are left for cooling before the castings are
taken out of the molds. Permanent metal molds are used to make many small
and simple parts.

2.1.3

Fabrication:
The fabrication process includes molding of a metallic sheet into formation of a
certain shape. As per the requirement of the specific part it is either casted or
fabricated.

2.1.4

Machining/ Assembling / Welding / Fitting:

After the casting the parts are taken to the machining section for their further
refinement. After the machining the parts are ready to be assembled. In The
parts are assembled and tack welded into place to get the desired product then
re-checked for accuracy.

Electrical Home Appliances, Gujranwala

Cluster Profile

Cluster Development Program

2.1.5

Testing, Repairing and Packing:

This is the last process of production. Finished products are determined
according to stipulated standards to sort out products that can be approved for
packaging. The un-passed parts are sent back for repairs and re-firing. The
products are carefully packed and then send to customers.

2.1.6

Process Flow Chart of Electrical Home Appliances

Raw
Material

Fabrication

Casting
Machining
Assembling

Winding

Welding / Fitting

Testing

Painting

Packaging

Storage & Shipping

Electrical Home Appliances, Gujranwala

Cluster Profile

Rejection/
Repairing

Cluster Development Program

2.2

Raw Materials Availability

The raw materials required for manufacturing electrical home appliances include
metal sheets, aluminum, winding papers, wires, router stator, different chemicals and
spare parts etc. These raw materials are easily available in the market.
Aluminum which is one of the main raw materials is imported from various countries
in the form of aluminum waste. The waste is melted and is reshaped into aluminum
sheets of different gauges to be used per the specification of the product. However
there is no assurance of quality as there is no material analysis or testing undertaken
to ensure quality.
Different chemicals, soda, salts and acids are required for electroplating and
polishing purpose. These chemicals can be easily obtained from the local market.
Spare parts are also easily available in the market and are generally imported from
China.
The finished products are sold under various brand names; the stickers of which are
easily available in the market. Usually these brand names are similar to some
famous brands.

2.3

Quality Assurance
Neither material analysis nor mechanical testing of appliances is carried out.
Variation in quality is a consistent feature. Firstly after receiving the parts from the
vendor the assembler check it as per the given specification. The passed parts are
issued to the process. At every level of work in process, the relevant foremen are
responsible for the quality; they check the quality on behalf of their department. After
completion of the product different type of in-house tests are conducted for own
quality assurance purposes as well as for meeting the buyers requirement i.e. watts,
ampere, voltage test, RPM (Revolution per minute), Temperature rise test. Facility of
labs is also available in this cluster for quality tests.

2.4

Technology Status
The involvement of technology in manufacturing process or for that matter in any
process is minimal. Most of the units are at micro level about 10 12 % can qualify
as proper units. There is lack of use of modern manufacturing machines and
techniques. Due to these issues small units are closing down. However the large
size manufacturing units are filling this gap.

2.5

Marketing & Sales

Manufacturers have developed contacts with the distributors in all over the country
and place their product on the market through these outlets.

Electrical Home Appliances, Gujranwala

Cluster Profile

Cluster Development Program

The distribution channel moves goods from producer to consumer.

Producer

Distributor

Wholesaler

Retailer

Consumer

Small manufacturers and venders usually supply their products to the wholesalers
and retailers of other cities. Sales agents are also working in this sector. They book
orders from other cities and supply the required quantity after purchasing from small
manufacturers. Some manufacturers also have their own retail stores for distribution
of their products.

2.6

Financing
Almost all the registered commercial and industrial development banks of Pakistan
have their branches in the cluster and are providing the financing at competitive
rates. But most of stakeholders depend on their own financial equity based
resources. It is also observed that the entrepreneurs normally prefer obtaining loan
through the informal sources. Due to unawareness, ineffective information flow and
paper work these entrepreneurs are reluctant to go to the financial institutions.

2.7

Human Resources
Human resource is present in abundance and skills are traditionally inherited. The
owner usually deals with management issues and marketing related activities. Most
of the labor is semi skilled and are trained on job. There is no specialized marketing
or accounts department. They facilitate their sales only on the basis of personal
contacts and no proper accounts are maintained therefore certain problems related
to tax return, monitoring and evaluation are faced. Only primary or intermediate level
employees are handling accounts.

3 Institutional Setup
3.1

Government & Semi-government Organizations

SMEDA, PSIC, EPB are three organizations which are providing facilitation to this
cluster at the government level. SMEDA has a regional business centre in
Gujranwala which provides various services; training services, marketing advice,
technical advice, legal services, match-making and other business development
services. TDA also has a regional office in Satellite town, Gujranwala and provides
facilitation in areas of participation in international trade fairs, exhibitions and trade
delegations.

3.2

Local Bodies/Chambers/Association
Pakistan Electric Fans Manufacturers Association (PEFMA) was registered 15 years
back. The central office is in Gujrat. The association is further divided in two regions

Electrical Home Appliances, Gujranwala

Cluster Profile

Cluster Development Program

Gujrat and Gujranwala. The association facilitates the fans cluster in mostly
regulation related problems such as SUI Gas, WAPDA, GCCI related issues and
also provides the sales tax form filling services.
Gujranwala chamber of commerce & industry (GCCI) established in 1978, has more
than 5650 members. GCCI provides various services to this cluster such as
arranging of Made in Gujranwala Industrial Exhibition for the promotion of local
brands, trade delegations, research & development and information dissemination.

3.3

Fan Development Institute

Fan development institute situated Goraloi, G.T. Road Gujrat. Facilitating this sector
as follows:
Providing facilities of material testing.
Providing technical/skill development training to existing manpower as well as
to new entrants in the field of fan industry.
Catering to the training needs of adjoining areas both at supervisory level and
workers levels.
Also provides technical support in production management, material control,
management and marketing.

4 SWOT Analysis
4.1

Strengths

4.2

Weaknesses

4.3

Abundance of cheap labor

Simple management structure.
Extensive supplier industry
Strong linkages with other key regional clusters
Entrepreneurial culture directed towards exports.

Inconsistent raw material prices.

Low framework for IP management in Cluster.
High utilities cost (gas & electricity) which resulted in high production cost
Large unorganized vender base
Low R&D for product innovation
Lack of quality controls
Use of traditional techniques and technology
Preference of informal credit
No proper accounts maintenance.
Lack of marketing skills

Opportunities

Rising local and international demand of electrical home appliances

Support of institutional infrastructure
Large export potential in electrical home appliances in Middle East, Africa and
Central Asia.
Exploit local expertise in related sectors, clusters technologies.
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Cluster Development Program

4.4

Threats

Low priced import from china

Changing consumer preferences
Large surplus capacities in the international market.
Increasing regulatory pressures

5 Business Potential:

Improvement in living standards is generating the high demand of electrical home

appliances both at national and international level. The vender development
program can help to standardize and quality and create more business
opportunities in the area.
There is large export potential in electrical home appliances. The exports trend in
the past two decades has been insignificant volume-wise, the capability of the
sector for export exist keeping in mind the technology & know-how available with
the manufacturers.

Electrical Home Appliances, Gujranwala

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