Chinese PC manufacturer Lenovo Group has decided to close its Baddi plant in order to rationalize its functioning in the country.

Mr. Amar Babu, Managing Director, Lenovo India stated that it is best to close the operation at Baddi facility as the demand is plummeting continuously.

The Baddi plant, which was established in 2007, has total production capacity of about 1 million units and hired around 20 people.

The Baddi unit started cutting production in March 2009, and the company is fulfilling legal processes such as tax payment, government clearance etc.

The company said that it will increase capacity at its Pondicherry division, which has a capacity to make three million units of desktops and laptops, and has over 100 employees.

"Eventually, we would look at increasing capacity at the Pondicherry unit as demand picks up," Babu said.

According to the IDC report for the July-Sep (2009) quarter, Lenovo holds a 7.3% share in the Indian PC market.

Lenovo recently rolled out its first smartphone named as 'Lephone', at CES in Las Vegas.

The smartphone, which is just 12 millimeters thick, features a 3.7-inch screen and has a Qualcomm Snapdragon processor. The will launch 'Lephone' in the China this year.