Professionals to manage Sanmar Group firms

Shobha Warrier in Madras

Ever since the rift between the promoters of a business group in Madras was splashed across financial dailies, everyone views even the slightest change in any business group with suspicion. That is why N Sankar, chairman of the Sanmar Group, informed the press first that the talk about a rift between the two brothers, N Sankar and N Kumar, was not true. The reason why his brother, N Kumar, shifted his office was because he had decided to look after their revived information technology unit.

"Yes, we do fight, but not in office. It's only when we are in the tennis court. The reason for our fight is his poor tennis; he has put on a lot of weight," Sankar said in jest.

After the Murugappa group's much-publicised move to induct professionals to run the various units of the group, it is the turn of the Sanmar Group to follow suit. Even though the family -- N Sankar, N Kumar and Vijay Sankar -- is full of qualified professionals, Sankar feels that today's business environment calls for separating ownership and operational management.

"We believe that we have always been professionally managed. Nobody in the group occupies a senior management position just because he or she is related to the owners. All the decisions are objectively arrived at and the management process is transparent. However, our group's shareholding is high in all the businesses that it manages. While there has always been an effort to separate ownership and management, there is a tendency to centralise decision-making around Kumar and me as long as we are involved in the operations, no matter how much we resist it. The current step is, therefore, to clearly distance ourselves from operational management and put the authority and responsibility in the hands of the managing directors," N Sankar said.

Sankar admitted that it was after a series of restructuring moves involving mergers, de-mergers, divestitures and closing down of some businesses that the Sanmar Group clocked a turnover of about Rs 11 billion this year. Exports account for almost 20-25 per cent of the company's growth.

The four major business segments of the group are the Chemplast Sanmar Limited dealing with PVC/chloro chemicals, Sanmar Shipping Limited, Sanmar Specialty Chemicals Limited and Sanmar Engineering Limited. The managing directors appointed by the group from September 1 will now independently manage all these companies. Sankar and Kumar will remain the chairman and vice-chairman, respectively, of the group.

With this revamp, Sankar has made each of the four businesses an individual company with no cross investments. The managing directors of these companies can look after their business and take business-specific strategic and investment decisions.

"All the managing directors are free to do what they wish. They also will have a free hand in fund-raising: equity and debt. We are providing free platforms for these people to function. I wouldn't say we have provided an ideal atmosphere, but we have given our best to them in the present situation," Sankar said.

He said that the five managing directors are part of Sanmar's corporate management board (CMB) and at the meetings of the CMB, issues of management process, philosophy, ethics and HR practices will be discussed. The managing directors are expected to meet weekly under the aegis of a corporate executive committee to discuss and find solutions to the issues relating to management.

The Sanmar Group -- through an associate company, Indchem Software Technologies Limited -- is making a major foray into software. In fact, Sanmar group was an early mover way back in 1978, but the venture didn't take off then.

"We now plan to enter into the information technology sector and telecom and telecom products. We will also have a physical incubator in Madras. We will be involved in the B2B, education and heritage areas. This venture is poised to get a distinct advantage in sourcing business because of the wide joint venture links that we enjoy in the US and Europe," N Kumar.

With the induction of professionals to head the various units of the group, "Sanmar group is redefining the corporate vision. It wants to support and encourage professionals to take on higher responsibilities in their core businesses," N Kumar added.

SEE ALSO:

Interview with N Shankar, chairman of Sanmar Group

The Sanmar Group Web site

Money

Tell us what you think of this special report