Glass Industry: Beyond Breaking
One by one, different sectors of the Indian economy are getting on to the growth bandwagon. It’s not just mega sectors like infrastructure and manufacturing that have begun to grow and expand. Even allied sectors, whose fortunes are largely dependent on them, are beginning to flourish.
A case in point is the glass industry which caters to the infrastructure and manufacturing sectors with applications across construction, automotive, packaging and electronics sectors. The glass manufacturing business has seen a major turnaround in its fortunes on the back of a demand pick-up.
In value terms, float glass—a sheet or plate glass widely used to manufacture windows, mirrors, doors and solar panels—is expected to touch Rs 40,000 crore in sales within the next four years. In 2022, it was estimated at Rs 24,000 crore.
Driving the success of the glass manufacturing business is the flourishing construction and housing sector. A standout player is Asahi India Glass (AIS), where the float glass business contributed a staggering Rs 1,676 crore, almost half of its overall revenue of Rs 4,035 crore in FY23.
According to CRISIL Ratings, the flat glass industry in India is gearing up for a substantial 65 per cent increase in capacity, investing Rs 7,200-7,500 crore over the current and next fiscal years. This expansion, driven by import substitution policies, sustained demand from end-user industries and high-capacity utilisation, will be the first by the industry in five years.
Mohit Makhija, Senior Director at CRISIL Ratings, notes that demand for float glass is expected to grow 10-12 per cent in the current fiscal in volume terms, following a remarkable 13-15 per cent rise in FY23. With India's per capita consumption of float glass at around 2.5 kg in FY23, compared to 7-10 kg in developed countries, there is substantial room for domestic glass manufacturers to thrive. The growing industrial sector and urbanisation is boosting the float glass market. Increased usage in automotive and construction industries is another growth driver over the medium term. In FY24, the solar glass segment anticipates a 23-25 per cent demand increase, driven by the government's renewable energy focus and faster substitution of imported solar glass.
SGI Growth Plans
Saint-Gobain India (SGI), a subsidiary of the French glassmaker whose history goes back 358 years, anticipates a robust 10 per cent growth in volume and mix, propelled by growing demand in the Indian market. SGI commands a leadership position in building materials (glass/glass solutions, gypsum, mortars, insulation and construction chemicals).
SGI, which reported a revenue of Rs 12,000 crore in 2022, sees an annualised revenue of approximately Rs 13,200 crore, projecting an estimated 8-10 per cent growth over FY23.
B. Santhanam, Chairman of SGI and CEO of the Asia-Pacific & India region, is confident of tripling the turnover in the next decade. He cites six pivotal trends - urbanisation, digital transformation, sustainability, formalisation, financialisation, and premiumisation -- as critical drivers of India's growth. "Saint-Gobain’s vision in light and sustainable construction is supremely well-aligned with these trends, and aiming to triple our turnover in the coming decade is a natural outcome," says Santhanam.
India is the third most profitable country within the global Saint-Gobain business. Anticipating an uptick in demand in the coming years, SGI is strategically focused on capacity expansion, with planned investments in a 4/5-year cycle. Having already announced investments of Rs 8,000 crore starting 2021, SGI committed over Rs 3,700 crore this January, with the remaining funds slated for phased investments.
Santhanam highlights the discernible shift in consumer preferences, citing premiumisation as the prevailing trend across residential homes, commercial premises, appliances, and automobiles. The surge in SUV purchases, doubling the average price realisation of cars, mirrors this trend. Then the growing demand for three-bedroom across top seven metros is also boosting the demand for glass, Santhanam points out.
In the context of premiumisation and value multiplication, Santhanam emphasises the role of Saint-Gobain’s unique solutions as superior differentiators, seamlessly combining aesthetics, functionality, comfort, and sustainability. He points to the evolving dynamics of office spaces, providing more room for recreation, meetings, and hygiene. The government's proactive initiatives have fuelled rapid growth in infrastructure, driving demand for construction chemicals that offer sustainable solutions and reduce CO2 footprints. In a further testament to its commitment to growth, SGI recently announced a substantial investment of Rs 3,400 crore across various businesses, including glasswool, gypsum plasterboard, plaster, acoustic ceiling, float glass (commonly known as flat glass), and solar glass among other product-mix, marking the next phase of expansion in Tamil Nadu.
Eye on EV Sector
Saint-Gobain offers a range of glass solutions for the automotive industry, with a significant focus on electric vehicles (EVs). The company is strategically prioritising the strengthening of its electric mobility solutions business within the EV segment. This entails providing specialised materials designed for insulating battery packs, including thermal insulation barriers, battery management components, gaskets, and waterproof seals.
As part of its expansion drive, Saint-Gobain India acquired Twiga Fiberglass, a Uttar Pradesh-based company specialising in glass wool manufacturing, utilising SG's technology for a reported sum of Rs 400 crore. Additionally, in the preceding year, the company acquired Rockwool India, a manufacturer of stone wool in India, renowned for its diverse range of insulation products catering to thermal, acoustic, and fire safety applications, reportedly investing Rs 150 crore in the acquisition.
Challenges Ahead
The glass manufacturing industry in India has several challenges to contend with. These include supply chain disruptions, fluctuating raw material costs, and the need for advanced technologies. However, the industry is responding with resilience and embracing sustainable practices.
The increasing demand for energy-efficient and eco-friendly solutions puts the spotlight on the need for innovative production processes. Upskilling the workforce to adapt to modern technologies and fostering research and development are among other challenges faced by the sector.
The glass making industry in India remains vibrant and dynamic, proactively transforming challenges into opportunities for sustainable growth, thanks to the efforts of companies like AIS, SGI, and others who have made innovation and sustainable solutions as their business focus.
‘We Need To Mandate ECBC Code’
B. Santhanam, Chairman, Saint-Gobain India (SGI) talks to Ashish Sinha about the rapid growth of SGI, businesses beyond glass and more. Excerpts:
What factors contribute to India’s significant position in the company’s global profit pool?
India continues to lead in growth and profitability for the group. All our businesses are performing well. India’s GDP at constant prices in FY24 is expected to be 17 per cent over the pre-Covid FY20. In this context, Saint-Gobain’s businesses (in nominal terms) are expected by FY24 to grow over 75 per cent compared to FY20, implying that the opportunities are significant for Saint-Gobain in India.
What are the new business areas and the growth expectations from them?
We are present in the entire range of light and sustainable solutions. Then, we are in glass, gypsum insulation, construction chemicals in the industrial space. We also have a market leading presence in surface solutions, ceramics and life sciences. We have made several bolt-on joint ventures, acquisitions to strengthen our presence in all these segments, improved our competitive and market position in each of our businesses, expanded our portfolio, and continued to invest ahead of the curve of competition and market.
What are the key issues facing the building materials industry in India? How can they be resolved?
Much of India’s commercial and residential infrastructure is yet to be built. Globally, buildings account for 40 per cent of the carbon emissions — 12 per cent embodied, and 28 per cent in operations. Currently, regulations for green building are recommendatory, we need to mandate them.
How is the company integrating alternative energy sources in its operations?
With a strong focus on circularity through enhanced usage of sustainably recycled raw materials, we are committed to sustainability. Achieving a 40 per cent reduction in the carbon footprint through low carbon glass manufacturing, attaining zero carbon plaster production in Chennai, and progressing toward a near-zero plasterboard plant, Chryso (a group arm and a leader in admixtures for construction materials) is dedicated to advancing ecofriendly practices.
ashish.sinha@businessworld.in
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