Schneider Electric is betting big on India's growth potential and the Modi government's emphasis on infrastructure. In a detailed conversation with Business Today's Anilesh S. Mahajan, Chief Marketing Officer of Schneider Electric, Chris Leong pointed that out that the company has grown in the country over the last 50 years and asserted it is poised to do well in the future as well. Edited excerpts.
Q. The world is talking about moving towards energy efficiency. In the present context, how are you altering your global plans? And where do you see India in your schemes of things?
Globally, we are a 180 years old company. For the last 50 years we are present in India. Here, we have practically grown with the country. Today, we have 27 factories here, over 20 thousand employees. We see India in multiple ways. First of all, how our solutions can help contribute to India's economy, India's productivity, India's growth. Second, India is also a major source for human capital for us. Many new breed of engineers are coming out of India. That's why we have our innovation hub in Bangalore. Globally, we have very few such hubs. We are doing innovation, not only for the domestic market here, but also for our clients across the world.
And third & most important is manufacturing. Manufacturing, whether you may say, it is for employment generation as well as for the economy, because we do manufacture products for the exports. So there are many levels at which we play. We firmly believe in the communities we operate in, in the economies we operate in. So we do many things: providing access to energy to several off grid areas with micro grid sustainability, providing vocational training to the electricians. This includes providing advance training in digitisation, IOT, bringing curriculum to collaborative universities, etc.
Q. How different it is to do business in India vis-a-vis the other markets?
The first thing I would like to clarify is that our business is quite perse. So we don't have one business, we have many. All the way from working with electricians for home and for buildings and all the way to total integrated solution for airport, for mega buildings for factories etc. And our business is quite well distributed; we have a quarter of our business in America, a quarter of business in Europe, a quarter of business in Asia-Pacific, a quarter of business in rest of the world, so we are quite perse. And, when you talk about a lot of emerging markets, Africa is also quite emerging a lot; South America is also quite emerging a lot, like India. So India is not unique to Schneider in terms of the emerging market needs of the differences me make. So, when you come to dealing business again coming back to the different business right when we deal with an electrician in Australia, of course they are better trained and well equipped, but if we deal with an electrician in Africa, in the middle of Columbia or in India there are more commonalities. That's why we have something called 'Energy University' in which we provide training and we also do electrician training schemes and it is not India exclusive. So to their point there is no commonalities there so when you say that we do business differently in India, the higher we go, when we are trying to sell to a C level, large business like Reliance, Tata Group, let's say they are building the new headquarters or a major factory or manufacturing; for all this C level selling or major system integrators it is no different from London or America because the C level and the advanced system integration, they have access to all the digitisation. So when you go there it is exactly the same. The more diffuse the more fragmented type of market you go the more specific is the area. But again the world has got more common classes than we imagine.
Q. Do you still have to train people in other economies?
We do. I will give you an example, I was talking about Africa, Middle East and then South America, even in India and Vietnam we still do a lot of training. Our training is a big part of what we do. But there are different levels of training, you have got the basic training all the way to now, we are in the middle of a digital transformation. Now when was electricity invented, I cannot even remember, let's say a long time ago. So for electricity, when we first participated, we have read the rule book right on the specifications of safety the basic, we did selectivity, we did cascading, how you complete the electrical distribution, network, design etc and all that. Now with digitisation, we need to connect every equipment to a control system that then you need to connect to the cloud to do analytics etc. Even the most advanced country's electrician or contractor also needs training because this is new. We are in the cross junction, it's like a smartphone 10 years ago. When you turn to a smartphone from a analog phone, it takes some time because before that nobody was writing apps for the phone. So that was the beginning of that. For our business in energy management and automation this is the inflection point. So even in very mature countries that you know, electrical distribution, we have to continuously upgrade and rewrite the next chapter. What does electric growth mean in the digitised electric world.
Q. Is business in India increasing?
Yes, for sure. because it's a growing market, GDP is 7.6, so the growth rate is up. Nobody lives in a cocoon, so if the country GDP is down it's hard to grow business in a country whose GDP is not growing.
Q: But in your business pie, how much increase is happening from the Indian markets?
We don't breakdown our geography to geography growth rates but I would encourage you to take a look at our recent first half industry report which we have shared about a month ago. You will see in there that in the 25 billion that we manage roughly 9 billion in residential and non-residential and about 10 billion is in industry and infrastructure. Then we have the data centres and others etc. Now inside which our electrical usage and distribution which in medium voltage, low voltage and secure power is about 19 billion. It is twice as big as our next competitor globally. And first half we declared plus 4 percent topline and plus 8 percent in our editor. In capital goods market, were you have longer cycles of capex investment but we are also evolving into opex business model because we provide a lot of services; maintenance, predictive, we provide a lot of software as serving businesses and things like that. So those will be much more recurring.
Q: Which areas will drive growth in India over the next five years?
First of all in a country, favourable factors is your GDP, your favourable factors is a lot of government policies to promote digital, technology, to promote growth and renewable, etc. When you talk about Make in India, we spoke about the 27 factories we have. We spoke about the manufacturing for India, the manufacturing for export, we are scaling in India. When we talk about digital, recently we have the Smart City but it's not only the Smart City, in oil & gas we do quite a lot, all the way from oil rate refinery to even before you go there in design and planning to stimulation to training etc. and all that, all the way to all the factories that's been built on daily basis everywhere. We are hoping that as we help to contribute to power and energy management here, we're contributing hopefully in three ways. One: we are providing technology that is future proof, meaning to say, it is scalable, it is connectable, it's available because capex, our product lasts 30 years. If you want to subscribe to something that allows you to scale, allows you to top, to upgrade for a long time. And this is what we provide. So we provide the latest solutions, future proof solutions for India.
Solution in your infrastructure, solution in your build-up etc. You need electricity to power all these developments. Second in doing so we need to then be able to develop applications to tap into all this infrastructure. Here our eco-structure platform is inviting a lot of India's products, a lot of the developers, the ecosystem to come and write applications to solve everyday problem of the enterprise, of the CEO or of the consumer. To tap into the data that is flowing in the power distribution to see how the intelligent data can help support new applications. We believe in an open eco-system that we want to facilitate to be able to accelerate this transformation for the world. Thirdly, we want the end beneficiaries are the consumers. Your children is going to go to the school, your family is going to use hospitals, you are going to visit shopping malls, what do you need? You need comfort, you need safety, you need reliability, and you want peace of mind.
May be there are more parents in remote areas; you want to give them the kind of accessibility that is safe. That would provide safety, comfort and peace of mind, etc. and all that other things. So we would like to deliver all the way from something that is for the future, something that will fuel or multiply effect for the local grid power of India, for the solutions of tomorrow and something that will benefit everybody
Q. Are you exploring newer verticals?
I would say that we are pretty focused on the verticals that we have identified. Because verticals is not a matter of sincere marketing, vertical is matter of ending solutions. The solution you need for hospital is not the same with the solution you need for a milk factory is not the same for the solution you need for a data centre and it doesn't happen overnight. We need to have focus and investment to make sure that we have the most reliable most high quality solution for those segments. So our segments is MMM (Metals, mining and minerals) , waste water management, F&B, oil & gas, data centre, utility, hospitals, then of-course a lot of commercial buildings and things like this. These are our key focus.