Saint-Gobain gets closer to the cus­tomer

Business Standard - - STRATEGY - T E NARASIMHAN

It is not un­com­mon to see busi­nesses that start out by fo­cussing on sell­ing prod­ucts or ser­vices to other busi­nesses (B2B) to har­bour am­bi­tion to even­tu­ally sell di­rectly to the end user. Go­ing straight to the end con­sumer — or B2C — makes im­mense busi­ness sense. You can get im­me­di­ate feed­back from the buyer, sell at a po­ten­tially higher profit mar­gin, and have more con­trol over the way you in­ter­act with the tar­get au­di­ence. All this is, how­ever, eas­ier said than done. The en­tire or­gan­i­sa­tion and its var­i­ous pro­cesses have to be changed to face and sat­isfy the new tar­get au­di­ence.

Can Saint-Gobain man­age that tran­si­tion?

The $47-bil­lion, three-cen­tury old French float glass ma­jor Sain­tGobain, which has been present in In­dia since 1996 when it ac­quired a ma­jor­ity stake in Grindwell Nor­ton, is look­ing to in­crease its turnover three-fold, from the cur­rent ~7,000 crore or so, over the next decade in In­dia. To achieve this, mov­ing closer to the end cus­tomer is im­per­a­tive, it reck­ons. The In­dian op­er­a­tions, which con­trib­utes hardly 1 per cent of the global rev­enue, will be the group's main en­gine for growth go­ing for­ward and this mar­ket will also be de­vel­oped as a hub to cater to de­mand from other emerg­ing coun­tries across the globe. “We see im­mense op­por­tu­nity in In­dia to use our ex­per­tise in sus­tain­able build­ing so­lu­tions to en­hance hu­man habi­tats,” says Pierre-An­dré de Chal­en­dar, chair­man and CEO of Saint-Gobain Group.

Saint-Gobain has had a rather long his­tory in the coun­try. Its man­u­fac­tur­ing foot­print in In­dia was reg­is­tered in the year 2000 with a new fa­cil­ity to man­u­fac­ture float glass at Sripe­rum­budur, near Chen­nai. Later it ex­panded the pro­duc­tion ca­pa­bil­i­ties to Ra­jasthan, Gu­jarat and is now look­ing to set foot in Andhra Pradesh. Till now, the com­pany has in­vested ~7,500 crore in the coun­try. To­day 95 per cent of com­pany’s lo­cal sales are of prod­ucts man­u­fac­tured at In­dian plants.

The com­pany claims that it man­u­fac­tures 50 per cent of the to­tal quan­tity of float glass made in the coun­try while the other half is pro­duced by four other play­ers. The com­pany’s share in the float glass ex­ported from here is even higher, a whop­ping 90 per cent.

To­day the mar­ket for float glass in In­dia stands at up­wards of 2 mil­lion tonnes, grow­ing at around 7-8 per cent an­num. The com­pany has a sig­nif­i­cant pres­ence in the B2B seg­ment al­ready. “We are just about be­gin­ning to ad­dress the B2C seg­ment. It is, how­ever, a long jour­ney and dig­i­tal is go­ing to be a big help,” says B San­thanam, man­ag­ing di­rec­tor, Saint-Gobain In­dia.

The com­pany’s B2C strat­egy will rest on a few fac­tors. Be­sides de­vel­op­ing ready­made prod­ucts that buy­ers can pick up off the shelf, the com­pany will also have to train its peo­ple in deal­ing with con­sumers and in find­ing out what they re­ally want and of­fer cus­tomised so­lu­tions. “If the value chain is not im­proved, there is no point on de­vel­op­ing a prod­uct in the B2C space,” says San­thanam.

In Saint-Gobain’s case, the value chain in­cludes con­trac­tors, ar­chi­tects, fabri­ca­tors among oth­ers. San­thanam notes that in a win­dow, for in­stance, the con­tri­bu­tion of glass to the over­all cost is less than 10 per cent. The bulk of the ex­penses go into labour, equip­ment and so on. So a big fo­cus for the com­pany will be train­ing peo­ple down the chain to re­duce wastage and keep costs un­der con­trol.

The com­pany will use dig­i­tal tools to train engi­neers and ar­chi­tects. It has also tied up with 25 diploma in­sti­tu­tions across Tamil Na du, Gu­jarat, Ma ha ra st ra and Raj as than to run pro­gramme son pro­cess­ing, fabri­ca­tion and in­stal­la­tion of glasses. For engi­neers it will have a sep­a­rate pro­gramme. It has also tied up with the Na­tional Pro­gramme on Tech­nol­ogy En­hanced Learn­ing. In­dia is the first mar­ket where the com­pany is de­vel­op­ing and test­ing out its de­vel­op­ment mod­ules. Dig­i­tal tech­nol­ogy will help the com­pany con­nect­the dot sand cre­ate a net­work, con­sist­ing of ser­vice providers who will ad­dress spe­cific cus­tomer re­quire­ments. In some­thing that has be­come par for the course, cus­tomers can now place or­ders, track sta­tus, re­ceive­ship­ment no­ti­fi­ca­tions, reg­is­ter com­plaints among other ac­tiv­i­ties.

The other plank of its B2C strat­egy will be of­fer­ing bou­quets to con­sumers. Be­sides glass, the group is also into build­ing ma­te­ri­als in­clud­ing gyp­sum, roof­ing prod­ucts, tile fix­ing mor­tars and the like. The com­pany hopes to bunch its prod­ucts to of­fer “so­lu­tions” for the build­ing and con­struc­tion in­dus­try, says San than am .“We want to be a com­pletes­o­lu­tion provider and this could bed one by com­bin­ing glass, gyp­sum, other ma­te­ri­als and elec­tron­ics to of­fer in­no­va­tive so­lu­tions for build­ing ex­te­ri­ors and in­te­ri­ors,” he says.

Saint-Gobain claims 50 per cent of In­dian con­sumers or one in two peo­ple rec­ol­lects the brand as one of the top three in con­struc­tion build­ing ma­te­ri­als. With such high re­call, mar­ket­ing to the re­tail buyer won’t be a big chal­lenge, the com­pany reck­ons.

In­dia is a key mar­ket for Sain­tGobain. While its rev­enue con­tri­bu­tion is small, its con­tri­bu­tion in prod­uct de­vel­op­ment, ap­pli­ca­tion in­no­va­tion, and try­ing out new strate­gies is sig­nif­i­cant, says the com­pany. With In­dia as its in­no­va­tion hub, the com­pany has been able to ex­pand its ser­vices in other emerg­ing mar­kets.

The com­pany’s re­search cen­tre at the IIT Madras Re­search Park, Chen­nai, was set up in 201516 at a cost of ~150 crore with a tal­ent pool of over 100 sci­en­tists and engi­neers. Since its in­cep­tion, it has de­liv­ered over 60 new prod­ucts, 65 patents and over 30 val­ueadded prod­ucts for busi­ness units.

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The com­pany has a sig­nif­i­cant pres­ence in the B2B seg­ment al­ready. It claims that it man­u­fac­tures 50 per cent of the to­tal quan­tity of float glass made in the coun­try, and has a 90 per cent share of ex­ports

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