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Saint-Gobain rejigs strategy to boost sales

Post Time:Nov 18,2008Classify:Company NewsView:345

CHENNAI: The flat growth of its core business, float glass, between January and October 2008 has prompted market leader Saint-Gobain Glass (India) to rework its business strategies. In a bid to shore up volumes and sales, the company has began re-negotiating contracts with its suppliers apart from focusing on aggressive sales and customer calls.

Citing customer innovation, making more sales calls to a larger base and increasing marketing spend as some of the key measures that the company is adopting, Saint-Gobain India managing director B Santhanam said, “We have gained market share. But we are walking like never before.”

Global slowdown offers an opportunity to pause and plan much better. As part of its cost cutting plans, the company is keen on re-negotiating rates with its suppliers for the proposed greenfield plant at Bhiwadi in Rajasthan.

Earlier in June this year, Saint-Gobain announced an investment of Rs 10 billion for its 3 lakh tonne plant in Rajasthan.

“There is no contract that cannot be re-negotiated. Given the general fall in prices of raw materials, we would like to re-negotiate rates with our vendors,” he told reporters on the sidelines of an event in Chennai on Thursday.

However, he said that he would not be able to share details on the extent of price reduction possible.

Stressing the need to be more aggressive on the sales and marketing front, Mr Santhanam said by planning better and by tweaking its strategies, firms typically had the potential to cut costs by 10%. “There is fat inbuilt in our system and we need to adopt lean techniques and increase marketing spend,” he noted.

He said “delay in the Nano (Tata small car) launch will affect us.” Saint-Gobain is the single vendor for Nano’s automotive glass sourcing. However, the company proposes to write off the loss in the next year.

Mr Santhanam said the embedded cost (raw materials and freight) have to evaluated from a supplier perspective, as to which part of the vendor has been touched by the oil economy. While there is no uniform rule to cut costs, he said by using intelligence and information, strategic cost parameters have to be taken into consideration.

On the global meltdown impact, he said the company had increased its market share by 41%, especially due the concept of green buildings getting popular. India had a potential of one billion sq ft of green buildings. Demand from solar energy too was a reason for the surge. But the industry growth remained flat between January and October this year.

Sales went up by 11% in the car segment, he said adding supplies to Hyundai’s i10 exports had benefited the company. “For Saint-Gobain, the automotive business has been good,” Mr Santhanam said adding its value-added products are received well in the Middle East, where it saw huge potential.

Source: economictimesAuthor: shangyi

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