A year after deal with L&T, Schneider sticks with '2 Brand 2 Sales Model'

With the merger of Schneider Electric’s India operations with Larsen & Toubro’s (L&T) electrical and automation (E&A) business, India is now the fourth global hub of technology, innovation and manufacturing for the French engineering and automation major.

Schneider Electric India Pvt. Ltd (SEIPL) was formed last year to run the merged business but the company followed a go-to-market strategy of ‘2 Brands & 2 Sales Model’ under which products are sold in two brand names of Schneider and L&T E&A even in the same categories. “This model allows SEIPL to serve the customer with two brands, two sales, and two channels and has played a pivotal role in shaping the confidence of our customers and has ensured that the two divisions stay independent of each other from the standpoint of products and solutions,” Anil Chaudhry, managing director and chief executive officer, Schneider Electric India Pvt. Ltd, Great India Zone, told Business Standard in an interview.

The leaders at both Schneider Electric India as well as L&T E&A continue to take independent decisions as well, said Chaudhry. L&T and Schneider had closed the deal on August 31 last year.

According to Chaudhry, the combined entity brought in a huge amount of design, product engineering and capabilities across – electrical hardware and products and the electronics segment. The integration was done during the challenging pandemic year.

The company was able to meet the demands of the economy- especially in the space of energy management and automation, said Chaudhry.

The merger led to the integration of over 5,000 employees from the E&A division, taking the overall employee base to 32,000. SEIPL has a total of 32 factories now with 35 distribution centers in India and a presence across 500 plus towns and cities.

As part of Rs 14,000-crore deal between L&T and Schneider Electric, brands associated with L&T and used by its E&A division would be available to Schneider for five years from August 2020, while the brands which are not associated with L&T corporate brand were transferred to SEIPL on a permanent basis. There is no separate royalty for brand use.

Over a period, products using L&T brand would migrate to a new brand under brand migration strategy to ensure there was no disruption of supply or service to customers. “Today, we can offer the largest basket of products to our customers across all sectors- from smart cities, hospitals, O&G, power generations, renewable energy and smart grids. As part of our commitment to the market, our customers now have a choice to use products coming from any of the divisions and these will be supplied by us,” said Chaudhury.

The addition of L&T’s manufacturing units helped in creating an integrated supply chain and widening of range of products and technologically superior solutions for Indian customers across price points. “In a large merger such as this, it becomes essential to match the synergy of entities involved and we have been quite successful at that,” he said.

While this helped in reducing dependence on imports, the company was able to expand exports as well. It exports to 35 countries, in the East Asia and West Asian regions, from India. The aim is to export 50 per cent of products manufactured here and sell the remaining 50 per cent in the domestic market.

Closing the deal itself was challenging but teams from L&T corporate office and Schneider Electric came together and started going through the documentation process digitally. The pandemic caused a two-month delay since physical signing of paper could be undertaken only after the national lockdown was lifted last year.

Chaudhury said an integration of this scale should ideally be a physical event. “However, we were fully prepared for kickstarting the merger process digitally. At the same time, it was important to connect with our customers and partners to provide them with perspective around our plan of action with complete transparency. Within the first 10 days of the merger, we connected with over 1,000 customers digitally to share with them the prospective roadmap.”

He said the company was on track to make a comeback this year after last year’s lockdown. “The slight ease in lockdowns this year, and the economic activities that continued during the second wave of the pandemic, helped us to accelerate business and recover our sales and maintain business continuity."