The Hindu : Business : Saint-Gobain expands capacity

Online edition of India's National Newspaper
Saturday, Feb 18, 2006

Business

Business

Saint-Gobain expands capacity

K. T. Jagannathan

Identifies India as a `priority zone' for investment

LONG-TERM COMMITMENT: Jean Louis Beffa (left), Chairman and CEO, Saint Gobain, Michael Segay (centre), Consul General of France, and Anand Mahajan (right), Country Head, Saint Gobain, at the brackdrop of the company's second float glass plant at Sriperumbudur on Friday. — Photo: V. Ganesan

SRIPERUMBUDUR: Saint-Gobain of France, a world leader in float glass, has identified India as a `priority zone' for investment in the emerging markets over the next half-a-decade.

Asserting this on more than one occasion during a press conference here on Friday, Jean-Louis Beffa, Chairman and Chief Executive Officer of Saint-Gobain, said "the Indian experience is the best in Asia for us.'' The Chairman made it clear that the French giant "is in India for a long-term'' and that it would reinvest bulk of the cash generated in India save for a `reasonable dividend' for the shareholder.

Demand for high quality products

Mr. Beffa was here to participate in the inaugural function of the second float glass plant at the company's existing premises. He said he was particularly impressed by the new speed of growth in India, especially of the above average growth in demand for high quality products. He pointed to the modern way of growth (use of innovative methods, modern management tools and concern for environment) in India.

The Chairman said the facility here was unique in the glass industry for not only the level of investment but also for the time within which it was built. "Never before anything such as this was built in one location as is done in Tamil Nadu,'' he claimed. The first plant with a capacity of 650 tonnes a day involved an investment of Rs. 650 crore. The latest plant with a capacity of 850 tonnes a day saw an investment of Rs. 800 crore. Saint-Gobain originally envisaged an investment of Rs. 500 crore for the second plant. Since the expression of commitment with the Tamil Nadu Government provided for an investment in fixed assets of at least Rs. 300 crore, the total investment in the second plant moved up to Rs. 800 crore. In addition, the company had planned a residual investment of Rs. 100 crore in an advanced architectural glass processing facility that would go on stream by October 2006.

Mr. Beffa said India Gypsum, a company engaged in plasterboard manufacture, had come under Saint-Gobain fold following the acquisition of British Plasterboards in the U.K. last year. "Plasterboard will be a growth area,'' he said. Saint-Gobain was committed to bring in the needed investment, he added. Saint Gobain, in fact, had entered India through the acquisition route by taking over Norton in the U.S. The French giant, Mr. Beffa, said would cross the euro 40 billion sales mark in 2006 and post a 20 per cent growth in profit.

A hub for export

B. Santhanam, Managing Director of the Indian subsidiary, hinted that the second plant could become a hub for export. "At least 50 per cent of output from this plant will be exported,'' he said. Until 2004, the company was exporting 30 per cent of its output. This had come down to less than ten per cent due to domestic demand, he added. He said Saint-Gobain commanded a market share of 26 per cent in the Indian float glass market. He was confident of increasing it to 36 per cent by the end of 2006.

Anand Mahajan, Country Head, said the group had nine entities in India and had a turnover of Rs. 1010.40 crore in 2005.

To a question, he said there was a business and management integration between Saint-Gobain Sekurit India, making automotive glass, and Saint-Gobain India Ltd. There was no plan for fiscal integration of these two, he added.

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