L&T deal will push Make in India for the world: Schneider India chief

In a Q&A, Anil Chaudhry says the combined business will actively contribute to make the country green and digital

Around two years after it was first announced, French technology and electrical company Schneider closed a Rs 14,000-crore deal to buy out Larsen & Toubro’s electrical and automation recently. In an interview with Jyoti Mukul, Anil Chaudhry, chief executive officer of Schneider Electric India Pvt Ltd and zone president for the group here, shares the road map for integration of the two brands and the combined entity’s ‘Make in India for the world’ plan. Edited excerpts:

What will be the ownership or reporting structure for Schneider Electric India Pvt Ltd? Will it be an arm of Schneider Electric India or a direct subsidiary of the global entity?

Schneider Electric announced the completion of a transaction to combine electrical and automation (E&A) division of Larsen and Toubro Ltd (L&T) with Schneider Electric India’s low voltage and industrial automation product businesses. The E&A business, except for Marine Switchgear in India & Servowatch subsidiary in the UK, will be combined with Schneider Electric’s low voltage and industrial automation products business in India. The combined legal entity will now be called Schneider Electric India Private Limited (SEIPL). While Schneider Electric owns 65 per cent of the merged business, Temasek owns the rest.

Will all products that were being made by L&T continue to have the same brand name and will Schneider pay a royalty for its use? Is there a timeline to use the brand name?

As part of the transaction, brands associated with L&T corporate and used by E&A today will be available to Schneider for five years from closing, while the brands which are not associated with L&T corporate brand have been transferred to SEIPL on a permanent basis. There is no separate royalty for brand use. It is all part of the deal value. Over a period, products using L&T brand will migrate to a new brand with a well-planned brand migration strategy and without any disruption of supply or service to our customers and partners. We will follow a dual brand strategy. L&T Electrical & Automation business will continue to sell its range of brand portfolio and so will Schneider Electric. This will help to address customer needs effectively, and the needs of our channel partners. The strategic intent is to continue and develop both the brands coming from L&T E&A and Schneider Electric in the Indian market.

Is there a roadmap for integrating the two India entities?

We have in place a 100-day plan of engaging with all stakeholders; customers, employees, partners, suppliers, and community, where we assure continued access services and lifecycle support.to the full product portfolio of L&T E&A and Schneider Electric. The coming together of Schneider Electric and L&T’s Electrical & Automation business is about combining two great teams, highly professional and specialised in the space of energy management and automation. The combined entity will see the integration of over 5,000 employees from L&T Electrical & Automation business, excluding its marine switchgear and servowatch systems, with over 2,000 Schneider Electric employees. The employee count for L&T includes its overseas markets such as West Asia and Africa, Indonesia and Malaysia.

Why did the deal take two years to close?

A transaction of this nature does take time. There are multiple levels of approvals, including regulatory approvals, since L&T E&A also has operations in West Asia, Africa, Indonesia and Malaysia.

How big is the India portfolio within the global business of Schneider in terms of revenue and market share? And, how much has it increased with the L&T buy?

With this merger, India is set to become the third largest country for Schneider Electric (after the United States and China) in terms of revenues and among the global hubs for manufacturing and innovation for Schneider Electric. With growth picking up in the Indian infrastructure segment, coupled with industrial manufacturing, driven by the Indian government’s ‘Make in India’ programme, the market for energy management and industrial automation offers is expected to grow over the coming years.

With the acquisition of L&T business, how big will be the Schneider offering in terms of number of products and range?

The combining of the businesses gives SEIPL direct access to more than 500 cities across sectors like agriculture, defence, healthcare, life sciences, C&SP, transportation and infrastructure. This combination will offer a wide range of products including the low voltage power products, digital energy solutions and home and industrial automation solutions catering to segments like hospitals, hotels etc. L&T’s electrical and automation business with its offerings of low voltage switchgear, electrical systems and equipment, energy management, metering and industrial automation solutions, is a recognised player in the low voltage and industrial automation business in India. The process automation, power systems, IT division, solar and Luminous are not part of the combined business.

How much of your manufacturing in India is for the export market?

Schneider Electric was exporting almost 50 per cent and we will continue to do the same going forward. India has now evolved as the fourth hub of innovation for Schneider Electric. A hub represents a full set of functions across R&D, sales, product, suppliers and global supply chain. It allows India to focus on making products which are unique for the India market and also Make in India for the world. We have 23 factories, 26 distribution centres in India and now from L&T Electrical & Automation business five manufacturing units in India and six overseas. In addition to that, Schneider Electric has a strength of over 1,800 people working in its R&D- which will now be strengthened by seven Innovation centres of L&T Electrical & Automation business.

What is the India plan of Schneider post the acquisition?

Schneider Electric has been present in India since 1963. We remain optimistic about the potential that India holds, and we will not be surprised if strong pick up in renewable projects coupled with demand for technology-led solutions results bounce back in two to three quarters from now. Our order books show a healthy trend in health care, life sciences, C&SP, transportation and infrastructure.