CHENNAI, 20th December 2010
Louis XIV, the king of France, placed orders for glass with the Royal Glass Works in Paris way back 1665. It was used in the Hall of Mirrors in the palace of Versailles. Two decades later, a new glass factory was built at the village of Saint Gobain near Paris. That's how the journey began for the world's oldest and leading glass maker Saint Gobain.
The France-based conglomerate now operates in over 46 countries across the globe, with a turnover of €37.78 billion in 2009. Innovation and investments in research to meet demands across industries have helped the company grow in different geographies including in India, says Saint Gobain Glass India (SGGL) managing director B Santhanam.
An engineer from IIT Madras and a management graduate from IIM Ahmedabad, Santhanam has worked with the Saint Gobain Group since its inception in India. The company began operations in the country in 1996 after acquiring a majority stake in Grindwell Norton.
It steadily ramped up its market share in float glass to around 40%. But India has just eight float glass lines, used by the construction and automotive sectors, compared to, say, China that has over 196 lines. The total installed capacity for float glass is around 4,700 tonnes per day, valued at around $0.75 billion.
"The surge in investments in the automotive and construction sectors has spurred demand over the last couple of years. The slowdown after the global financial crisis did not have much of an impact on sales. Our strategy of having a tight leash over finance, materials and operational costs helped us during the slowdown.
We also shifted our focus to green buildings and government projects. In fact, the country caught on to the green building trend during the recession. Today, we sell products that are priced from Rs 30 per square feet up to Rs 10,000 per square feet to cater to the needs of these industries," he says.
With auto sales and investments in housing picking up and the economy poised to achieve 9% growth this fiscal, he expects a huge surge in demand for float glass. Saint Gobain's largest green field venture in the country is at Sriperumbudur, near Chennai.
It invested Rs 1,600 crore in the float glass facility, the largest investment made by the French multinational company in a single location. The breakeven is not instant, given capital-intensive nature of the float glass industry and there are also cost pressures, he says.
SGGL's turnover is pegged at Rs 1,600 crore for this fiscal. The company invested Rs 600 crore in the first phase and around Rs 525 crore in the second phase. Additional investments aggregated to Rs 450 crore, taking the cumulative investment to Rs 1,575 crore. "In the first phase of our investment, we had planned debt equity of 1:1. However. we opted to bring more equity. In the second phase, the investment was part-funded by debt and internal resource generation."
The company claims that it brought in state-of-the-art technology into India. This was the key differentiator vis-a-vis competitors. "We have also applied global quality norms in our Indian operations. The glass made here has clarity that is ideal for mirroring and architechtural applications. We also invested time in building a distrution network and the brand," he says. The company started exporting glass to neighbouring countries within two months of production at its Sriperumbudur facility.
Now, Saint Gobain is investing around Rs 1,000 crore at another facility in Rajasthan. Of this, Rs 800 would be for the float line and the balance will be spent on other processing facilities. The company also reckons that India is a promising country both in terms of consumption and production of solar energy. "We have cutting edge technology to deliver superior solar glass solutions through our international expertise and manufacturing bases in India," he says.
However, constant innovation to suit the needs of discerning customers is the strategy to ramp up sales in India and become more aggressive in the export market. "Companies are looking at innovation within their own walls, but we need to be perceptive to customer needs", he says. SGGI is also keen on replicating the success story of its parent company in developing down stream units.