Chemplast next gen holds on to gold standard
The city-based Chemplast Sanmar marks its golden jubilee of operations on May 4 this year. The company is part of the 1.5 billion USD Sanmar Group.
By : migrator
Update: 2017-04-11 18:15 GMT
Chennai
For N Sankar, the Group Chairman, it’s an extra-special occasion as it’s a milestone for the flagship company he started in 1967. Having handed over the baton to his son Vijay Sankar, the Deputy Chairman of the group, with interests in chemicals, engineering, shipping and metals, the conglomerate is now ready for the next stage of its evolution.
The Sanmar Group has been through the pre-liberalised era when licensing and bureaucratic hurdles have led to many startups ending their entrepreneurial journeys. “We reached our 50th anniversary with our heads held high and with reputation intact. That was our focus,” says Vijay Sankar, recalling the various milestones and challenges the venture has gone through.
The five-decades have not been easy as there are not many Indian companies in the chemical sector that can boast of a similar achievement. “We have been innovating with time. We invested on research and development. Not many have managed that, especially the traditional manufacturing companies,” he notes with pride.
Reeling out the 2017-18 business plan, he says the chemical business is expected to generate sales worth Rs 3,500-4,000 cr and other businesses contributing over 1,000 cr. Enthused by the PM’s ‘Make in India’ scheme, the scion says it has tremendous opportunity for the industry if implemented in letter and spirit.
“We should get back some of the opportunity that we have lost because the chemical industry – compared to many of the industries (in the limelight) which have bad assets or stressed asset pile, is not on the same level… we have managed to innovate by ourselves to a great extent. But we still have not achieved our full potential as the Indian market is huge,” he says, noting that right incentives and provision of a level-playing field will make the domestic players more competitive.
“Any aspect of the chemical industry you take, the market is huge and but unfortunately there aren’t incentives to expand. Either Indian or even foreign companies can come here and expand. But what they do is - they come here and dump products from overseas manufacturing units. We would like to change the approach to an India-centric manufacturing-led strategy,” he points out.
Vijay dwells at length on duty-related drawbacks as he believes the WTO has not been leveraged to its fullest though the anti-dumping investigations have improved substantially.
“When we attempt to tap markets like South Korea or Taiwan, we are unable to export there as the nations set up entry barriers using legal provisions.
On the other hand, India is open to business from all. Although, the WTO can be engaged to our advantage, the competency of the officers in charge leave much to be desired,” he laments, citing the instance of the company having to drop duties from 35 per cent to 5 per cent (even lower than US) for some of its products post-liberalisation in 1991.
Developing countries with per capita income levels ahead of India such as Philippines, Brazil and Indonesia, had higher levels of duty. He elaborates saying, “I believe this is unfair. Where is the incentive for somebody to manufacture? We don’t have the feedstock and we don’t have a natural gas advantage like Saudi Arabia or shale gas leg-up like the US. We don’t have a pipeline network or common effluent treatment plants.
Our interest costs and logistics costs are extremely high. But with all the negatives, we are not seeking protectionism… we are saying - give us level playing field and allow this industry to boom.” So, does he view his entry into business as an inheritance or pursuit of passion?
“Bit of both, I would say. I was exposed to it from a young age. So, it has always been an area of interest for me. The entry was almost natural, in a manner of speaking. I don’t know whether it was pre-planned or structured,” he says.
Vijay, a CA and MBA, draws inspiration from his father, a chemical engineer who is more finance-oriented than most finance professionals. Speaking on the contrast in core competencies between them, Vijay says, “A degree in chemical engineering is good, and not just because we are in the chemical industry. Legends like Jack Welch have also vouched that a chemical engineer offers the right combination for a business.”
“I look up to my father, having worked with him for many years now. After four years of working with another senior professional, I have a 14-year-long working relationship with my father. It was a great training ground. I didn’t have to look anywhere else,” he signs off.
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