Sanmar Chemplast, the flagship company of the Chennai-based $1.5 billion Sanmar Group, is gearing up to celebrate its golden jubilee. The company was in the spotlight when Canadian billionaire Prem Watsa invested $300 million through Fairfax India, an investment vehicle of the Fairfax Group dedicated to India. In an interview, Vijay Sankar , deputy chairman, Sanmar Group, spoke about the company’s 50-year journey. Edited excerpts:
What does the chemical business portend for you as a company?
Chemicals is a very mature and balanced industry.
We are very committed to it.
On a per capita basis, it is a largely under-served industry in India ... whether you look at polymers, speciality chemicals or any other segment.
Chemicals are a basic product used in day-to-day life right from shirts to cars.
However, it does not attract the attention it deserves. Automobile and IT (information technology) sectors attract all the noise. Our industry is, however, more important than those.
Why is the chemical industry not getting that much attention?
A lot of it is business-to-business (B2B) largely. That could be one of the reasons. So, it is not a business-to-consumer (B2C) product like automobile or IT. Also, the chemical industry has got a negative connotation with the environment, which is unjustified, in my opinion.
Do you have a comfortable presence in the industry?
It is a very broad industry, with different players working for different areas. We are in the polymer, chlorine, poly vinyl chloride (PVC) segments. The opportunity there is large. We want to be a dominant PVC company and also speciality chemicals. Financially, we are strong now. This can back our expansion plans. Our suspension PVC capacity is 300,000 tonnes, and we are looking to treble it in stages. Besides this, we are planning two projects – one for Hydrogen peroxide and another for chlorinated PVC.
You have been in business for 50 years. Have things become easier for you to operate?
Earlier, when we started, we had to import everything. Now, the fabrication capabilities and other support systems are available in India. So, in some ways, it is easier.
Despite being the single highest contributor to GDP (gross domestic product), the chemical industry does not get enough attention. Even our mother ministry is ... in many ways ... neglected most of the times, and a lot of the resources are dictated [upon] by Ministry of Oil and Gas. This makes it difficult to get a policy focus when compared to other countries. We also don’t have duty differential advantage. The government’s plan to have a petroleum, chemicals and petrochemicals investment hub has not taken off.
With the Prime Minister on a stronger wicket now, we hope our industry will get the necessary attention.
What has changed in your group in 50 years?
We are one of the earliest corporate houses to professionalise our management. We strongly believe that it is the quality professionals who have driven our group. For us, our reputation is more important. We don’t mind being dull or boring. Even ten years down the line, I want to see the same value system continuing. If our reputation is not dented, I would be very happy. Our first priority is reputation. Then comes sustainable, profitable growth.
What do you think of the availability of funds?
The biggest challenge is we don’t have a good industrial finance option unlike the U.S. or Europe. We have lost our big project financing institutions, which have now become banks. I believe development finance institutions make a lot of sense. They can address the concerns of industries better in terms of project delays and ensure long-term financing.
