COMPANY SPECIAL...................... SAINT GOBAIN Heart of Glass

SAINT GOBAIN Heart of Glass





How Anand Mahajan turned Saint Gobain India into a market leader

A s designations go, it's unusual. Anand Mahajan's calling card proclaims him to be `General Delegate,' head of Saint Gobain's General Delegation in India, Sri Lanka, Bangladesh. Taking the corporate-asa-country analogy, that makes him the 350-year-old French multi-national's ambassador to these three countries, though he's not French and doesn't even speak the language. Indeed, when he was awarded the designation 19 years ago, Mahajan recalls there were murmurs at the company's headquarters (HQ) in Paris: “The delegates in other regions were all French. People wondered if there might be a conflict of interest in an Indian representing the company in India. In the end, they decided to make an exception in my case.“

There was also the fact that Saint Gobain was in a hurry to get going in India. Though it had an established presence in the Americas, the 42 billion company was still new to Asia in the mid-90s. The acquisition of Norton, an American abrasives company, had then given it a timely toehold in India in the form of Grindwell Norton, a listed entity whose managing director was Anand Mahajan. Though it was a small company, Grindwell owned a remarkable pool of managerial talent, thanks to its recruitment of engineer-MBAs from the IIMs in 80s.

Saint Gobain has since then leveraged this talent to grow its business at a compounded rate of 20.7%. The group's annual turnover in India now stands at `4900 crore and it's the largest glass producer in India and the market leader in construction glass. Through all this it has maintained a steady record of profitability, which has recently led to HQ budgeting for another `2300 crore of investments in India. “Saint Gobain India's success lies in the way we have managed to keep a good balance between growth, profitability and return on investment,“ says B Santhanam, managing director of Saint-Gobain Glass India and one of the original IIT-IIM graduates from Grindwell Nornton.

House of Glass

When Saint Gobain made its first in vestment in a glass plant in Chennai, there were already five established players in the market -including global joint ventures Gujarat Guardian and Tata Asahi -and all of them were then losing money. But coming in late was not without its advantages. Santhanam says: “We took a different view of the market. We went for scale and the latest technology in the belief that the Indian market was set to evolve.“

It was a gamble that played off. By the time the Chennai project (total investment: `1400 crore) came on stream, the market had expanded and Saint-Gobain Glass India began making profits earlier than expected. The company repeated this strategy of investing in a downturn with the `686 crore acquisition of the float glass business of Sezal Glass in 2011, giving it a presence in Western India. This was followed by a greenfield facility in the North, located in Bhiwadi, Rajasthan, pegged as Saint Gobain's biggest glass manufacturing unit in the world. In a recent article in Corporate Dossier, Professor Vijay Govindarajan of Tuck School used the Bhiwadi project as an example of the boldness with which corporates are seizing opportunities in India.

An Indian View

When Saint Gobain India launched an advertising campaign highlighting the clarity of its glass, it initially caused much discomfiture at HQ. The big-budget TV campaign featured a group of Japanese suits at a restaurant in a five-star hotel cowering in alarm as a cleaning lady flings a bucket of water in their direction, which actually hits a glass wall. But it wasn't just the cost of the campaign that raised eyebrows in Paris. Glass is a commodity in Europe, a B2B product, and Saint Gobain had never in its history advertised it. “We didn't realise this was something we had to get cleared by HQ,“ says Santhanam. “But when the global head of the glass business came to India, he saw our point of view. He said even the butler in his hotel knew the Saint Gobain brand, thanks to our advertising.“

Today, Saint Gobain is the lead supplier of glass to the construction industry, which accounts for 80% of its production. The rest goes to the automotive industry, where the market leader is Asahi of Japan. Over the years, Saint Gobain has played the role of an evangelist in its industry, contributing to the architecture and design options available to the construction industry. Now another business in the group is playing a similar role, with a different construction material.

Playing Evangelist

In 2005, Saint Gobain acquired British Plaster Board, which came with a company called India Gypsum. Now rebranded as Gyproc , the business is set to become one of Saint Gobain's major areas of investment. Gypsum has been around for a while, but has only recently begun to find favour in the Indian construction industry. “As the market leader, we work with architects, builders and contractors at the design stage. This allows us to get out of competing on cost,“ says V Subramanian, managing director, Gyproc.

Gyproc also makes plaster for false ceilings and its showpiece project is the Infosys cafeteria in Bangalore. The cafeteria was an incredibly noisy place until the company installed a false ceiling that reduced the noise by 11 decibels. “Huge, noisy cafeterias are a typically Indian problem. My colleagues in other parts of the world are not conditioned to think of our product as an acoustic solution, but we've demonstrated it's an opportunity.“

Delegation Network

Saint Gobain has 13 `delegates' around the world but Anand Mahajan has always been a little different. While other delegates play the role of governors, with no direct business responsibilities, the 62 year old Mahajan has continued to head Grindwell Norton (he will complete a record 25 years as managing director next year). Governor-delegates usually have a separate office with their own staff, but Mahajan has chosen to create a different structure. Instead of creating new roles at group level, he's assigned added responsibilities to people at Grindwell. For example, Grindwell's company secretary doubles up as legal and taxation head for the Saint Gobain group in India. “We have a network instead of a country-head staff office,“ says Mahajan. “This has kept things lean. In this system, career growth comes horizontally, with more responsibilities for the person, rather a vertical promotion.“

This philosophical aversion to flab has helped Mahajan maintain a level of profitability in Sanit Gobain Indian that's far better than the group's record in China.“If you're able to give returns, getting resources from HQ is not difficult,“ says Subramanian. “China operations have delivered volumes, but profitability there has been lower than India.“

A graduate of St Xavier's College, Mumbai, who worked with SBI before going to Cornell University to do an MBA, Mahajan recalls his early days with Saint Gobain, when he would sit through meetings conducted in French, not understanding a word. “The company was so Europe-centric in those days, it didn't even have translators. But things have changed,“ he says.

What are the challenges being the bridge between corporate HQ and India?
“The biggest pain is when new people come in at HQ and you have to educate them from scratch. If you think they have to take your word for it, it will backfire.You have to sell yourself all over again,“ says Mahajan.

by Dibeyendu Ganguly CDET10APR15