Saint-Gobain India seeks price cuts from suppliers

The Indian unit of Saint-Gobain, which is developing a greenfield plant in Bhiwadi, Rajasthan, said 13 November 2008 that it will renegotiate rates with the project“s suppliers to achieve substantial…

The Indian unit of Saint-Gobain, which is developing a greenfield plant in Bhiwadi, Rajasthan, said 13 November 2008 that it will renegotiate rates with the project“s suppliers to achieve substantial cost savings. “Taking advantage of slowdown and the general fall in prices we will renegotiate rates with our vendors for the Rajasthan project. However, I will not be able to comment on the price reduction that would happen”, Saint-Gobain India managing director B. Santhanam told reporters. The company would ask suppliers who benefit from the fall in the price of crude oil, steel and other commodities to cut prices. There is scope for a 10% reduction in purchasing costs, he said. The company announced the 300,000-tonne plant at Bhiwadi in June 2008, to be set up with an investment of INR 10 billion. The new unit will take the company“s capacity to 750,000 tonnes per annum, as its INR 15 billion unit at Sriperumbudur has a capacity of 450,000 tonnes. Asked about the impact of the slowdown on the company“s operations, he said: “We have increased market share to 41% as the concept of green building is catching up. Further, there is good demand from the solar energy sector”. However, there has been no volume growth for the industry between January and October 2008, Santhanam added. “Our exports of value added glass to the Middle East has increased”, he said, adding that supplies to car exporters like Hyundai Motor India Ltd also rose. “We will be hit by the delay in the Tata Nano launch as we are the sole sheet glass vendor”, Mr. Santhanam added.