They had been trying for years in vain to get Crane to come to India. With Sesh the technology expert, we got in touch with R Ramachandran to take charge of the commercial portfolio. Over the next two years, we made a series of contacts to find a JV partner for the seals project.
John Crane, then in Chicago, politely fended off our overtures. The experience at Sealol, another leader in mechanical seals, was more interesting. When we went to their Boston office, the CEO was on vacation in the Cayman Islands and we were asked to visit him there. We spent Halloween evening there, but nothing ensued.
First meeting with Durametallic Corporation
We met with success at Durametallic Corporation, a family-owned company, one of the leaders in mechanical seals. Eventually we did convince them and they overcame their inhibitions. They first met father at Cleveland.
Sesh and I visited them next. They were very impressed with us, especially Sesh’s knowledge and his commitment. They however, felt apprehensive about entering into partnership with two young individuals; they would have preferred to deal with an established company.
The irony is that 37 years after that meeting, I am still here, while Durametallic (now Flowserve) has undergone so many changes. Kalamazoo was a small town in Michigan and they had never ventured out of the Midwest.
The start of Durametallic India
I initially invested about Rs. 9 lakh of equity in the project, Durametallic invested a little over Rs. 6 lakh, and we took a term loan from Indian Overseas Bank. A building with 14 acres of land I had bought on OMR for another project came in handy. Those were exciting times. We did everything hands-on, had daily meetings. Sesh was the technology man, Chandar (Ramachandran) looked after marketing, and Prasad joined us from TVS to manage finance. Gopinath, now with Flowserve, joined us in Bombay as a sales engineer. It was a small well-knit group. We did innovative things. We introduced direct selling by engineers, breaking away from the widespread practice of dealerships. It all seemed to work. It was an amazing sales team, sold on the concept of direct sales engineers. We made a profit in the very first year, 1976-77. Today, 35 years later, Sanmar Engineering has done Rs 600 crore business with a Rs. 150 crore profit on operations.
Durametallic, now Flowserve, is still one of our most successful companies. The first money we put in, plus a small addition a year later, were the only net investment we ever made in Sanmar Engineering. All subsequent investments have come from internal accruals.
Expanding product range
Though we were doing well, our market was still a small field, and the volumes were small, by the very nature of the product. A sales engineer often travelled from Calcutta to Gauhati to sell two seals worth a few thousand rupees each. We found we could sell more products to the same customers. Their chief engineers asked us why we were not supplying them a whole range of other products. In a couple of years, we decided to go in for the manufacture of more products. We started an internal identification programme for new products. Again we looked for partners who were the best in their field. Rupture disks, relief valves, solenoid valves and so on followed one after the other.
BS&B Safety Systems was our second joint venture. The company responded to our letter, but the telex went to Gordon Woodroffe. CD Gopinath, who was in charge there, recognised my name on the telex and forwarded the message to me once I confirmed it was meant for me. Our track record with Durametallic helped us clinch the partnership. This was in 1981. Each partnership became a reference point for the next one. This is another family-owned business. We have very strong ties with the Kenneally family. BS&B India rupture disks became another success story, still going strong.
Durametallic Asia
When I spoke to Durametallic Corporation about the bright prospects for mechanical seals in the Far East, they readily agreed to venture there. Durametallic Asia came about in 1982 in Singapore, owned 50% by the Indian JV, and 50% by Durametallic, USA. While my team entirely managed the business, Durametallic gave the entire money, given the restrictions on Indian companies prevalent then. They guaranteed the loan and so on, showing amazing confidence in us. Starting from an insignificant presence, Durametallic Asia grew to be a market leader in Singapore and the ASEAN region in less than five years. We enjoyed continuous growth, with success in every new joint venture. Durametallic was taken over by Flowserve in the 1990s. Until then, Sanmar Engineering was known as the Durametallic group. It was only after the repeal of the MRTP Act that Sanmar Engineering came into being as a group of engineering industries.