Saint-Gobain bulletproofs growth plans amid global uncertainty

CHENNAI: French construction material major Saint-Gobain on Wednesday posted record half-year operating income for the year, despite the pandemic, supply chain disruptions and inflation. Its operating income hit a new record in the half-year, reaching 2.80 billion euros, up 13% on last year at constant exchange rates. “Over the coming quarters, we are ready to adapt as needed to the consequences of rising interest rates and inflation, along with the geopolitical and energy situation in Europe,” Chief Executive Benoit Bazin said.

Echoing the sentiment, B Santhanam, CEO, APAC and India Region, Saint-Gobain and Chairman, Saint-Gobain India, said his main concern revolves around energy. “The gas shortage is not a European problem but a global one,” he says, noting that the alarm bell has not yet rung in India. Although, the cascading effect of the energy crisis is bound to hit many industries including the construction materials company and fertilisers industry.

The availability of chemicals and soda ash and the impact of a massive cost inflation are not something to be kept on the backburner. “Germany is a major supplier of chemicals. We must watch out for six months to assess the emerging energy scenario. So, it is not a cost issue alone but we will be impacted by gas availability, not to mention the already existing global shortage of soda ash.”

As the Ukraine-Russia war continues, CEOs globally are grappling with resource challenges. The reality is it is a world marked by “volatility, uncertainty, complexity, and ambiguity”, concedes Santhanam, who has been helming the operations ever since it flagged its presence in 1996 in TN.

This comes at a time, when the India operations of Saint-Gobain have shown fantastic growth, resulting in the float glass major not only gaining market position but also being an ‘outlier’ in the global growth rates. We have recorded 60 per cent growth, says the CEO, highlighting that the company has “thrived,” to tackle the COVID challenge.

The MNC is busy ramping up its operations across the country. “Expansion, greenfield, mergers and acquisitions are the key focus,” Santhanam tells us at the Saint-Gobain Research India, housed in IIT-M Research Park and spread over 1.20 lakh sqft.

For the 2021-2024 timeline, a sum of Rs 6,500 crore to Rs 8,000 crore has been earmarked as capex that will go into scaling up operations in locations such as Vizag, Rajasthan, Gujarat and Karnataka. Last year, Saint-Gobain hired 1,000 people.

Santhanam also points out the shift in mindset among customers, thereby reinforcing its mantra to become a more visible contributor on the sustainable green front. “By 2025, 70 per cent of our electrical energy use will be from renewables. One-third of our innovation is focused on sustainability,” he says. The gypsum plasterboard plant investment validates this as the aim is to turn it into a net zero entity by 2024. Therefore, biomass, solar, wind and all other alternative sources are being evaluated. “We are experimenting with Hydrogen as a fuel,” he says.

The company aspires to hit the Rs 30,000 crore mark by 2030. “We have gone from Rs 7,000 cr to 12,000 crore revenue in two years, despite the pandemic,” he reasons. For the number one supplier to Tesla, the mojo is back. The company has not only drastically improved specialised glass but is also supporting competition in the automotive space apart from catering to the pharma industry with its FDA-approved products from Bengaluru to top-notch vaccine makers of the globe.