The past two years have seen hectic activity at the Chennai-based Rs 1,100 crore Sanmar group as it was involved in a series of mergers, de-mergers, divestitures and closing down of some business lines.
The final picture that emerged after the restructuring is that the group will operate in four segments: PVC/chlorochemicals (Chemplast Sanmar Ltd.), shipping (Sanmar Shipping Ltd), speciality chemicals, engineering (speciality and engineering are managed by a clutch of joint venture companies) software and insurance. The group is now negotiating with AMP, Australia, for a foray into life insurance.
The promoter brothers, group chairman N. Sankar, and vice chairman N. Kumar, have underscored that all is well between them and have categorically refuted a report to the contrary in a leading business magazine. The brothers have also announced that they will leave the day-to-day management of the group to professionals, and that the group will re-enter the IT sector.
Professionals come to the fore
Despite holding more than 50 per cent equity in all group companies, including in the groups' only listed company, Chemplast Sanmar, Mr Sankar and Mr Kumar have decided to let professionals manage the group companies.
As a consequence, five executive directors in the group have been made managing directors to oversee the group's different business lines. They are: Mr. P.S. Jayaraman at Chemplast Sanmar Ltd, Capt.B. Chakrapani at Sanmar Shipping Ltd, Mr. M.S. Sekhar at Sanmar Speciality Chemicals Ltd, Mr. M.N. Radhakrishnan for Sanmar Engineering Corporation and Mr. B. Natraj at the Corporate Group.
"The appointment of managing directors for the group companies is to announce that we, the promoters, are not involved the daily management of the companies," says Mr Sankar. According to him, the promoters will restrict their involvement to strategic and policy decisions.
Mr Sankar adds that except for the human resource policy that will be uniform for all the group companies, barring the IT outfit, the managing directors have to chalk out strategies and policies by themselves for each of their companies.
Back to IT
It may be recalled that the Sanmar group exited Total Business Solutions India P Ltd (now Complete Business Solutions India Ltd) by selling its stake to the US partner, Complete Business Solutions Inc some years ago.
"Early last year, we decided to venture into the IT industry again with a focus on offshore development of telecom and internet products," says Mr Kumar. Partnering with Silkroute, a Singapore company, a new company called Silkroute Indchem Ltd., was floated to fund start-ups in the B2B areas. "Out of a Rs 10 crore corpus, we have funded six ventures. We do not take more than 30 per stake in any start-up," says Mr Sankar.
Managing the joint ventures
The one thing that is unique about the Sanmar group is the number of joint ventures it has entered into in the past. The group has 19 joint ventures – both with Fortune 500 companies and other small to medium-sized outfits operating in niche areas.
The joint venture companies can be grouped under two business heads: speciality chemicals and engineering. While speciality chemicals account for nearly Rs 175 crore turnover from nine joint ventures, the engineering group has 13 companies contributing a turnover of Rs 320 crore, of which 10 are joint ventures.
Mr. Sekhar says, "The speciality chemical businesses group is involved in pharmaceuticals, flavours, fragrances. Our current focus is on pharma intermediates." The speciality chemicals group has ventured into contract research. Out of the nine products undertaken for contract research, three have been commercialised and three are on the verge of commercial production. The group is putting up a sophisticated research and development wing at an outlay of $ 2.3 million.
The shipping business run by the newly formed Sanmar Shipping Ltd operates five bulk carriers and three product tankers. According to Mr Sankar, the shipping business brings in a revenue of Rs 125 crore and other ventures like shoe uppers and shoes, professional grade printed circuit boards, stock broking and other financial services activities contribute around Rs 70 crore to the group's total turnover.