India is one of Schneider Electric’s most important export bases where the French energy and automation giant has a listed entity, subsidiaries and a strong R&D base, said Jean-Pascal Tricoire, its chairman and CEO. In an exclusive interview with ET’s N
ehal Chaliawala and
Satish John, Tricoire said the company is looking to double its exports from India over the next four years. Edited Excerpts:
Politicians today are veering towards regional plays. Is globalisation under attack?
We are the most global company in our industry. But, I’ve always believed that the world is first local. So today we have structured Schneider in a very different manner. We don’t have one big headquarters where everything is decided. We have structured our company around four equal (bases) – North America, Europe, India and China – which are in charge of their product specifications, R&D, strategy, manufacturing, the network of suppliers and marketing. And their first mission is to be as local as possible. If you take India as an example, today 60% to 70% of the products that we are selling in India have been designed in India. And 90% of what we sold here has been produced here. So, from the beginning we think with a local approach, because the most important thing is to adapt very fast to the requirements of the market and work very closely with all the stakeholders in the market.
What will be the focus areas for Schneider Electric in India?
The priority is to supply clean energy to everybody in the country because energy is the passport to a decent life after education. Our priority is then to participate in all the major action plans of India, like self-sufficient India around industry and energy. It’s about smart cities where we participate in many aspects like smart buildings, smart grids, smart water, smart transportation, all of the sub-brands which are where we can really contribute. It’s about renewable energy and energy security for the country, which really go together. It’s about everything related to education and training, especially for the youth. Those are our priorities for the next few years in India.
Can you elaborate on India as an export base for Schneider?
We’ve been working on India as an export base for almost 15 years. I’m very proud to say that we’ve taken along on this journey a lot of our suppliers. India is one of our top export bases and we intend to double exports in the next four years.
In terms of investments, what are your plans for the next four years?
Today we have several thousand people who are working in R&D. The first investment we are doing is in R&D of applications. So we develop technologies for India and for the world from here. And the second one is in capacity, because to grow exports we need more capacity, which we are expanding.
What would be your message for the shareholders of your Indian-listed company?
Schneider is an exciting investment because we are the world leaders of electrification for decarbonisation and of digitisation for efficiency. And those two are sectors of the future. And they’re even more relevant in India for three reasons. No. 1 –India is developing very fast. No. 2 –India is developing its electrical network very fast and it can do it with the brightest and newest technologies. No. 3– India is the core country of digitisation in the world. It will be leading the digitisation and Internet of Things that Schneider has been leading. So this is what I’m saying to our investors –join us to pioneer a future that is smart and green.
The Indian government has brought in several schemes like production-linked incentives (PLI). How do you look at them?
Those incentives are certainly needed because they help to kickstart the industry. You start to be competitive when you operate at scale. And we need those incentives to go from that initial stage to operate at scale. What is important though, is that India should realise that the opportunity is to create an industrial setup that is both smart and green. So it’s really important to direct those investments into the right sectors or into the right companies. It is especially important to help SMEs. Schneider plays a role there because we supply technologies for electrification, automation and software which allow these companies to leapfrog what has been done somewhere else and allow them to go straight to an international level.
You acquired L&T’s Electrical and Automation business in 2020. How has the integration been and how is the business faring?
We’re extremely happy with the merger of Larsen & Toubro’s E&A business with ours. The teams are highly motivated and highly competent, of course. We are also attached to the brand, the culture, and the partners of Larsen & Toubro. We’ve started to work together and bring value to E&A. We are opening, as we speak, export of E&A products to Schneider Electric’s global sales network. We are launching four flagship products in the next few months after only one year of working together. So we very optimistic about what we are building together.
A couple of decades ago, you decided that Asia is the market to focus on and you moved your headquarters from France to Hong Kong. Right now, if you look at Hong Kong, how things have changed over there, are happy to be located there?
I think it’s important for me to be based in Asia, because Asia is 60% of the world population, because it’s the fastest growing region. It is also the place of two of the three largest business of Schneider – India and China. Asia is the centre of gravity of urbanisation, industrialisation and digitisation. There are more people using mobile phones in Asia than in any other place in the world. On those three conditions of our society must be served by green energy and digital platforms. And this is what Schneider is serving. So, it’s important for us to be in the fastest growing place on the fastest transforming the region of the world.
You had in 2015 asked the French government for bolder reforms in the labour market to take advantage of the low commodity prices and interest rates. In that context, now oil prices, commodity prices and interest rates have all gone up, so how do you work on growth?
In the past seven years, there are several things which have changed. In our industry, there has been a massive acceleration of digitisation, which has been pushed by Covid. If you look at what we are doing at Schneider, it’s been a massive acceleration of digitisation, which in a few years has become 50% of our business. A big inflection which has happened is about sustainability in energy. So the world has really understood that energy is at the core of the equation of sustainability in two aspects, carbon reduction and energy security. And this has two major effects for Schneider. It’s really accelerated everything we do in energy efficiency, which is roughly 70% of our business. That means every country, every city, every industry, every home has to reconsider the ways are consuming energy. Therefore, you’ve seen the jump in renewable, you’ve seen the jump in electrification. So our strategy at Schneider is to supply technology for sustainability based on digitisation for efficiency and clean electrification for decarbonisation. We’ve seen those two since 2015, accelerated dramatically. Now, what I also see, is that interest rates remain quite low anyway around the world, and the level of investment is very high. So if you look at the dynamics of Schneider, over the past two years, it’s been a massive acceleration of our top line. We’ve been growing at a double-digit rate last year, again, based on that this acceleration of digitisation on this acceleration of electrification.
What will be your acquisition strategy be going ahead?
When you look at the past 18 years, we’ve tripled in size. We have also transformed enormously. We are now 50% digital, 70% of what we do is linked to sustainability – sustainability products and services, sustainability software, sustainability consulting. India is a very significant part of what we do because India is now our seventh largest business in the world, just after the US and China. It has been the fastest growing part of our business. The major part of our development has been done by organic growth. If you take the example of India, we did a very strategic acquisition last year by acquiring E&A (electrical and automation) from Larsen & Toubro. But we don’t do many of those moves. Most of what we have invested in India has been done in the form of recruitment, investment, creating new factories, on R&D. I have to say what distinguishes India from the other countries is that this is a place where we have the most R&D in the world. About 60% of what we do here in R&D is software.
Schneider has several companies in India. Would you look at simplifying and bringing all of them together into a company which will be listed in India?
We have several brands. We have one company which is listed. But most important is the value we bring to our customers and the development we bring to people. We are a recruiter and a trainer of people in the country whether for Schneider or outside of Schneider. Today we have more than 70,000 people in India from a few 100 at the turn of the century. We have offered people joining us career opportunities which are multifaceted, from technology, electrification, software, to one of the largest supply chain in the world. I want to mention that one of our Indian factories has been qualified among the very few factories in the world as the Lighthouse Factory by the World Economic Forum because it’s both smart and green. India has become for us a very large base of exportation. Our Indian colleagues are serving the world and many of them have international careers. So what’s the most important for us is the solutions we bring to our customers and the careers we offer people to joining Schneider from India.