Interview with B Santhanam, CEO Asia-Pacific & India Region, Saint Gobain
India has a chance to build its cities in a sustainable way
IE: How does the group view India in terms of operations, research and also as a market?
B Santhanam (BS): Over the last two decades, we have grown by 19 times in terms of our revenue and also invested close to Rs 12,000 crore in the country or approximately 2 billion Euro cumulatively. It is one of the largest commitments made by Saint Gobain anywhere in the world.
In the manufacturing part, India contributes to about 5 per cent of the group’s global turnover. At this point in time, India is the third most profit-making country (as of 2022) in absolute profits in euro terms. So, this gives India an important position as the investments are sustainable, in terms of the revenue and profit we generate. Our plans on capex spending, close to Rs 8000 crore between FY21 and FY25 is also on track. This has been possible due to the highly sustainable business that is profitable, growing and generating strong cash flows to fund these expenses.
India is a trendsetter in terms of energy and resource efficiency regulations. To be on top of the standards, our focus has been on skills, regulations and collaborations with the like-minded in the industry. This is one of the reasons why nearly 7 out of 10 big buildings in India use Saint Gobain’s solutions.
Increasingly, we are focusing on more light and sustainable construction material. This is very important for India, as much of the country is to be constructed. It provides an opportunity to follow a different path from how countries have achieved this earlier. It offers a chance to make sure that our buildings are much more sustainable and use less resources during construction and the entire life of the building. All this, while ensuring comfortable living which is both energy efficient and comes at a reduced construction cost. Saint Gobain has the solution to these needs.
Apart from this, India offers a massive talent pool in manufacturing, research and development, digitalisation and they form an important part of the company’s global footprint.
IE: India is a shining star of the global economy. How exciting is it as a manufacturing company to be part of this growth momentum?
BS: All businesses of Saint Gobain India – glass, gypsum, construction chemicals, abrasives, ceramics and life sciences, in FY24, will end up 75 per cent in revenue, more than during FY20. We are way ahead of the pandemic recovery curve.
We believe that the digital transformation, demographic dividend, emerging middle class will drive the nation’s aspiration. Even if we consider that India grows at about 6 per cent for the next 30 years, the growth will be four times as what it is now. That means businesses like us will be much more than that, as we grow nearly 1.5 to 2 times the economy.
IE: Manufacturing is becoming more digitalised resulting in better processes and increased efficiency. Your views on this.
BS: We were very early to identify the trend of digitalisation of the industry. Even before the term Industry 4.0 was coined, we realised the need to digitalise our factories and supply chain. We started working in a humble way and today we have a strong 400-member team in our centre of excellence, INDEC 4.0 in Chennai. POCs, pilots, large scale implementation of Industry 4.0 are first experimented in India and then deployed globally.
With the digital shift, our focus has been on empowering employees at the factory level who work with machines. Now they are able to make better decisions, real time and this has helped to improve the overall process and enhance productivity.
We are also focusing more on machine learning and statistical work, to improve the quality of decision making and also efficiency. We use data for customer acquisition, engagement and retention. As a building material company, we started way ahead of the curve and still remain the same way.
IE: How are you enabling your ancillary units to be part of this digital transformation?
BS: Our upstream is mostly raw material processing plants and it is mostly done in house. But our downstream value chain is very heavy, where our products like glass and gypsum are transformed for various end uses by several small and medium enterprises. For them, we have an interesting programme, where we provide a Manufacturing Execution System (MES) that improves operational efficiency. It is a system created for us but we have modified and made it simple and lighter for our customers.
Lot of our products require installation and we have digitalised that too. The digital tools enable our installers to work with high accuracy and precision. We are working to significantly digitalise our downstream value chain which comprises of several entities.
IE: A long standing dilemma has been, if sustainability and growth can go hand-in-hand. At Saint Gobain how do you approach it?
BS: Sustainability is at the heart of Saint Gobain. Our purpose statement, to make the world a better home means more comfortable, more sustainable and more functional. At every stage when we introduce products, we try to look at the sustainability angle. Yearly, a third of all R&D spend is focused on this aspect and we ensure that our products are efficient and at the same time use less resources and brings down the overall operational carbon footprint for our customers.
Our goal at the global level is, by 2030, using a base of 2017, we want to reduce our scope 1 and 2 emissions by 33 per cent. Globally we are growing at 2 to 3 per cent per annum and this percentage is significantly higher in India. If we take India, compare to our 2017 levels, we will have three times volume growth in all our business. That means, if we do not take any action, our carbon footprint will become 300. But we have a target to reduce 100 to 67 because we want to reduce the absolute footprint in 2017 by 33 per cent.
This is easier to do in a country which is growing by 2 to 3 per cent, but when we are growing three times as in 2017, it becomes an extraordinarily complex task. But at Saint Gobain India, we believe that we have the right projects that can pull down the 300 to 100. And then to reach 67, we are working on it.
That is the reason why, today, we have a low carbon glass which reduces the carbon footprint by 40 per cent. We will have a gypsum plaster board with near zero carbon footprint (Scope1 and 2) by second half of next year. We already have a near zero carbon gypsum plaster that will replace cement plasters which are extensively used today. This is an alternative to the traditional sand and cement plaster that is very carbon intensive.
Many of our businesses track carbon footprint almost real time and have strategic plan to reduce it. At the same time, our employees have several small projects too. When I look at this, I am happy that we are walking the talk with all our emissions measured and managed, even if it is a herculean task.
Saint Gobain group understands the Indian operation’s commitment and that is one of the reasons the Arch Prize for sustainability in 2022 was awarded, out of the 35 countries we operate in.
IE: How do you expect the construction material industry to evolve over the years?
BS: Our estimate is that the construction industry will triple in the next 10 years and India will probably double. That means a higher demand for sustainable solutions. This provides us an incredible opportunity to play a very important role in finding light and sustainable construction solutions.
IE: From your position as CEO Asia-Pacific & India Region, your views on the operations across this region?
BS: We have excellent operations in China, Vietnam, Malaysia, Singapore, Thailand and Korea. There is tremendous amount of learning from each other. For instance, we have a good engineering team in China that excels in setting up very frugal high-quality factories for gypsum and another competent quality engineering team. India has a strong foothold in glass and also in sustainable plasterboard.
Now we are able to combine the best of the talents in Asia Pacific and India, in engineering, operational efficiency, innovation, new business model, digital talent,.. This creates a much larger pool, with each enriching the other very well.
