‘India Is A Very Competitive Market’

Pierre-André de Chalendar, the chairman and CEO of Saint-Gobain Group, a French construction and glass manufacturing company, recently inaugurated the multinational’s seventh global research and development (R&D) centre in Chennai that will cater exclusively to global markets. Talking to BW Businessworld, Chalender said he saw India playing an important role in the global economy and catering to the group’s growing demands worldwide. The €41-billion company, which is celebrating its 351 years in business, has logged sales of Rs 5,100 crore in India in just two decades and forecasts a high growth trajectory in the next few years. Edited excerpts of the interview:

Where does India stand in Saint-Gobain’s global scheme of things?
India is well positioned for the company’s global footprint as well as to cater to markets in Southeast Asia and the Middle East. This place is a very competitive market, so we are moving things here; what we manufacture for India is for India. The group’s seventh global research centre in Chennai will innovate and develop products for the local as well as other markets. The Indian research centre has already launched 22 products, out of which four have been launched overseas, including France. We have already applied for 15 product patents. We have not shifted any of our global research projects out of the other six global research centres to India yet, but we will do that as and when required.

What sort of returns are you expecting from the new R&D and manufacturing unit?
The returns are measured in terms of new product launches replacing old ones. The group has been investing around €400 million in R&D every year and this has resulted in an increase in the contribution of new products to the total sales. The new products launched in the past five years have contributed around 25 per cent of the total sales. They have better margins as well. India is a perfect test bed for habitat R&D for hot and humid countries, and our facility will focus on developing solutions for such regions. We have also initiated expansion of our existing glass manufacturing facility in Sriperumbudur near Chennai with an investment of around Rs 800 crore, which will make it one of the largest glass manufacturing facilities in the world. The new refractory will cater to exports around the world.

What are your growth plans in India and globally over the next 10 years?
We had a great run during the past 20 years in India. The company has made significant investments, which enabled the group to establish its presence across the country. We are growing at a rapid pace, and we have planned capital expenditure of €1.4 billion for the next two years. We have plenty of growth projects for India, and our solutions are growing fast here. Globally, we will continue with our investments and acquisitions in high-growth countries and high-performance materials, and continue to strengthen our distribution networks in the most advanced markets, including India. In this way, we will boost the potential for the group’s organic growth through the development of new services, and in particular by leveraging digital technology.

Saint-Gobain is known to nurture startups globally. With India’s startup ecosystem growing at a rapid pace, what is the company’s initiative on this?
That is precisely the reason why we have built our R&D centre in the IIT-Madras Research Park. It has around 100 scientists and engineers, and the head count will go up to 250 over a period of time. We are encouraging bright Indian minds, which will help us in developing innovative ideas and provide sustainable solutions for the group’s diverse segments like construction, high-performance materials, energy efficiency and sustainable development market. Through our NOVA external venturing, we fund and reward startups from India and elsewhere that come up with innovative solutions in the markets served by Saint-Gobain.

You were vocal about fighting climate change at the Paris Climate Summit last year. How is Saint-Gobain committed towards climate change?
We are strongly committed to fighting climate change because what we manufacture can have a significant impact on the energy consumption of buildings. In most cold countries, more than in hot countries, 40 per cent of the total energy consumed is in buildings, and we know how to reduce this, and that is Saint-Gobain’s contribution. So from that standpoint we are very much a part of the solution as we manufacture those products. We try to reduce our carbon dioxide footprint by manufacturing those products. We are committed to reducing our carbon dioxide emissions by 20 per cent by 2020. For example, in Europe, while producing double glazing glass, savings in terms of the carbon dioxide emission is equivalent to energy produced in three months which is 100 to 150 times energy saved per kg of glass produced. That is our commitment. Companies in alliance with governments need to develop climate framework, to build low carbon society, to allow developing and poor economies to reach low carbon development.

What is your outlook on the current global economy, as there is speculation that we will see a repeat of the 2008 slowdown?
This year the global economic prospects look very positive, especially in India, which is a bright spot in South Asia. Elsewhere, there are uncertainties but it is too early to comment. However, we have to wait and watch the economic situation in China.

Paris attacks have been very unfortunate. What is your take on that? Has it affected your business and the industry as a whole?
Unfortunately, not only in France, terrorist threats are present in many countries, which is creating bigger instabilities in such countries, and having a ripple effect. But I think there is no other way but to fight terrorism in every way. In terms of economic impact, it has not been huge, very few companies have been directly affected. What really impacts in such situations is the tourism of a country not mainly the companies per se.

monica@businessworld.in