N Sankar, Chairman, Sanmar group with N Kumar, Vice Chairman of the group.
The family-owned Sanmar group has taken a major step forward in the process of separation of ownership and operational management, in keeping with the modern doctrine of corporate governance. The group has appointed professional Managing Directors for four of its major companies engaged in the core businesses of Chlorochemicals, Speciality Chemicals, Engineering and Shipping, and at the Corporate Office.
N Sankar is the Chairman of the group and N Kumar the Vice Chairman. The Managing Directors appointed are P S Jayaraman for Chemplast Sanmar Limited, Capt B Chakrapani for Sanmar Shipping Limited, M S Sekhar for Sanmar Speciality Chemicals Limited, M N Radhakrishnan for Sanmar Engineering Corporation and B Natraj as Managing Director-Corporate. For the time being the entrepreneurial thrust in the Software-IT sectors will be directed by Kumar. The group has a strong professional team of about 800 running its 20-odd individual profit centres, and the Managing Directors would work through individual profit centre managers, in their different areas of responsibility.
The Managing Directors, who are well qualified and highly experienced, have taken office on September 1, 2000 and would have complete freedom and opportunity to manage the businesses that they are responsible for, within the parameters of the Sanmar group’s management philosophy.
N Sankar said, “We believe our group has always been professionally managed, in the sense that the phrase is normally understood. There is nobody occupying a senior management position because of his relationship with the owners; all decisions are objective and the management process is transparent. However, our group’s shareholding is high in all the businesses that it manages”.
N Sankar, Chairman, Sanmar group (at the centre), to his right N Kumar, Vice Chairman, Sanmar group, with the newly appointed MDs of the group. L to R: P S Jayaraman, MD, Chemplast Sanmar Ltd., M S Sekhar, MD, Sanmar Speciality Chemicals Limited, B Natraj, MD-Corporate, the Sanmar group, M N Radhakrishnan, MD, Sanmar Engineering Corporation and Capt B Chakrapani, MD, Sanmar Shipping Limited.
“Thus, while it has always been our effort to separate ownership and management, there is a tendency to centralise decision making around me and Kumar 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 MDs”.
Sankar added, “We think we’ve taken what is almost a final step towards separation of ownership and management. We are trying to satisfy public norms of corporate governance”. The management structure under the MDs has been finalised to ensure institutionalisation of management practices, and provide opportunities for growth, while clearly identifying potential successors. The MDs are expected to meet weekly under the aegis of the Corporate Executive Committee (CEC) to quickly thrash out common issues relating to management.
The erstwhile Corporate Management Board (CMB) has not only been retained, but broadbased to function along with the CEC, on common issues such as HR, IR, Finance, IT etc. Kumar will oversee the group’s entry into IT. So far, Indchem Dot Com has funded six B2B, education and heritage portals. More recently, the company has collaborated with Silk Route of Singapore and renamed itself as Silk Route Indchem Dot Com to play the role of an incubator to prospective dot com ventures.
Indchem Software Technology, will eventually tackle offshore development of products, particularly of the telecom and Internet sectors. In his new capacity as MD, P S Jayaraman will assume charge of the PVC and chlorochemicals businesses. In addition, he will also be responsible for managing Cabot Sanmar, a joint venture company that manufactures fumed silica.
Jayaraman hopes that Chemplast Sanmar will improve its profit margins from the last quarter of this year, having invested Rs.60 crore on expanding the speciality resins capacity at the PVC and chlorochemicals plants at Mettur. The company has acquired a second hand plant from NOCIL for this. Given the cyclical nature of the business, the concentration is on niche products.
Captain B Chakrapani, MD, Sanmar Shipping said that although the company operated five bulk carriers and three product tankers, it reported a loss last year. It is expected to bounce back this year and will look at acquiring additional tonnage. The company will also look at other areas, especially the lucrative LNG transportation business.
M N Radhakrishnan, MD of Sanmar Engineering Corporation (SEC), which has nine operating joint ventures, said that they had become globally competitive units, emerging as best cost and value suppliers to their international collaborators. It was also proposed to make SEC a legal entity so that it could hold investments and raise funds, he added.
M S Sekhar will be the MD of Sanmar Speciality Chemicals which manufactures a range of speciality chemicals used by flavours, fragrances, pharmaceuticals and polymer industries. As part of its foray into contract research, it is setting up a state-of-the-art facility in Chennai at a cost of $ 2.5 million.
B Natraj as MD-Corporate of the Sanmar group, will coordinate the other joint ventures in the group, including Atofina Peroxides India Ltd., Bayer Sanmar Ltd., and Dragoco India Limited. He will also be responsible for the group’s proposed entry into the insurance sector in association with AMP of Australia which some time ago took over Sanmar’s original collaborator GIO.
Sankar said, “We three (Kumar, Vijay and himself) will not hold any part to compete with professionals. The five MDs are professionals who know our group culture and value system”.