Date:15/03/2008 URL: http://www.thehindubusinessline.com/2008/03/15/stories/2008031551080200.htm

Back Saint-Gobain weighing expansion, greenfield plant

Spiralling input costs pose challenge to remain competitive

“The decision on expansion of the existing plant in Tamil Nadu will be taken in couple of months.” – Mr B. Santhanam

Mr B. Santhanam

V. Rishi Kumar

Hyderabad, March 14 Saint Gobain Glass India, part of the $60-billion diversified French major Saint Gobain, is in the process of evaluating the possibility of expanding its existing plant in Tamil Nadu while considering another greenfield project.

“The company has thus far invested about Rs 1500 crore in the manufacturing plant in Tamil Nadu and now has one of the widest range of glass products for domestic and industrial applications. We are now looking at initially taking up expansion of the existing plant,” Mr B. Santhanam, President and Managing Director, Saint Gobain Glass India Ltd, said.

The company has begun investing in India since 2000 and in the last seven years it has grown to acquire a market share of 38 per cent. Having presence in basic glass, solar control, advanced solar control and other segments ranging from Rs 30 per sq ft to Rs 10,000 per sq ft, across different applications, we have managed to add to the company business and this has helped in consolidation across segments, he said.

Speaking to Business Line, Mr Santhanam said that a share of about 38 per cent is significant in a market that is extremely competitive. While prices of inputs have spiralled, cost has gone up marginally, posing a big challenge to remain competitive. “The decision on expansion of the existing plant in Tamil Nadu will be taken in couple of months and we are at an advanced stage of finalising plans for another plant. However, we are yet to finalise the nature and scope of overall investments,” he said.

For instance, cost of power is up from Rs 100 to Rs 250, freight up from Rs 100 to Rs 250, soda Rs 100 to Rs 150 and manpower costs up from Rs 100 to Rs 250, while the price of finished products has gone up marginally from Rs 100 to Rs 111.

No other product has had such high input costs; the finished prices more or less remaining stable. Therefore, it is all about scaling up, brining efficiencies and diversifying the product portfolio, he said.