The Sanmar Group - Matrix - September 2003

Employees of the Year

The following received Employees of the Year awards for the year at the Group Annual Day.

K S Venkiteswaran
V S Ramesh
M Chandrasekar
J Sridhar
S Ramesh Babu
Dr T Devanathan
Dr Bhuvaneswari Sridhar
G Hari
J Nirmal Babu
M Jeyamurugaprakash
S Sunderraman
R Madan Kumar
K Sattanathan
A Ravikumar
K Shankar
V Arumugam
R Venkatasubramani
S Chakrapani
P S Raman
Lavanya Venkatesh

Building a Performance Culture

Sanmar theme for Group Annual Day

The Group Annual Day was held on 13th and 14th August, with a decision to do it on the same dates every year henceforth. The theme for this year’s event was Building a Performance Culture, in a logical continuation from last year’s annual day programme Sanmar Group Chairman when N Sankar spoke forcefully on the need to develop an execution culture.

Sarada Jagan started the day’s proceedings with an introduction to the execution culture.

Purpose of the theme

SEC Managing Director MN Radhakrishnan (MNR) breathed fire in his enunciation of the theme that followed. He spoke of faithful implementation, satisfactory execution of Sanmar policies, absolute commitment to the group’s growth plans, action plans, budgets, strategies, etc. He called for absolute adherence to Sanmar’s People Philosophy, Management Philosophy, and Ethics Policies, Total Quality Management and Levels of Authority.

Continuing in the same inspiring vein, he exhorted all Sanmar managers to display total dedication to the Sanmar Culture. According to him two vital elements of a successful performance culture are:

M N Radhakrishnan

1.	Long term goals can only be achieved by the successful execution of a series of short term goals.
2.	Everyone must remember that the day is not over until the day’s job is done satisfactorily.

Overview of the businesses

Vijay Sankar gave a quick runthrough of the past performance and present position of the group’s businesses, as well as his vision for 2003-2004 and beyond.

He spoke of the focus on growth at Chemplast Sanmar, and the turnover which remained largely flat, but poised for take-off.

He referred to the recent acquisition of the Karaikal plant enhancing the caustic soda and chlorine capacity by 200 tonnes per annum. The proposed greenfield 150000 tonne PVC plant elsewhere would entail an investment of Rs. 200 crore.

Vijay Sankar

The sales of Cabot Sanmar had remained flat for the last few years. With the expansion in the untreated grades and the commissioning of manufacture of treated grades of Fumed Silica with a capacity of 200 tpa, the company was well on its way to realising its installed capacity of 700 tpa. It enjoys more than 60% of the domestic market share. An investment of Rs. 3.75 crore has been made for the new capacity.

Sanmar Shipping: Sales dropped during the year, and the fleet was reduced from 8 to 4 ships. However the operating profits were good and debt reduction was a major focus area. The company decided to concentrate its attention on the energy sector, and adopted the tanker acquisition strategy, looking at prospects of buying new ships. Accrued cash has been ploughed back into the business.

It was a very good year for SEC, with export sales exceeding Rs. 100 crore, while domestic sales remained flat at Rs. 160 crore. There was substantial improvement in the bottomline continuing the previous year’s trend (Rs. 38 crore). A jump is anticipated in both the topline and the bottomline, with domestic turnover expected to go from Rs. 160 crore to nearly 200 crore. There has also been all round improvement in efficiency.

Vijay stressed on the huge opportunity to be a supplier of choice to joint venture partners. According to him, the share of our collaborators’ buy from us is insignificant before the collaborators’ sales figure of 4 billion US dollars. There is an opportunity to grab business worth a billion dollars for SEC companies collectively. To achieve that, we need to focus on quality, delivery on time, customer responsiveness and speed of development.

Chairman’s address

In his address, Chairman N Sankar stressed the importance of performance orientation in the group, where restructuring of the businesses had been completed. Each of them was poised for growth, and, “Without any prior discussion, all of us are focusing on growth,” he remarked.

N Sankar

Tracing the course of development Sanmar had taken so far, he remembered how the group grew aggressively in the 1970s, diversified in the nineties and the rationalization brought about by the challenges posed post liberalization of the economy in the last decade. The touchstone in this scenario, is, “Which business can we effectively support with resources?” He referred to the formalisation of the Sanmar Philosophy and Code of Ethics and called upon the gathering to attempt some constructive introspection, raising the questions, “Where are we today?” and “Is what we have evolved into, the ideal?” and some crystal ball gazing as well. He wanted small groups to come up with a blueprint for 2010, but with a vision linked to reality. “Is the Sanmar way the right way?” he asked those present to question, “Do you believe our management and ethics policies are taking root, are they being practised in reality? Can they be improved?” Sankar set the tone for the proceedings of the Group Annual Day, a time not only for stocktaking but also enquiry and rededication to the rules of the game in the emerging performance culture scenario.

Kellogg: Our Learning Experience

S Ravi, B Venkataramani and S Chakrapani (clockwise from left)

The panel of three shared their learning experience at the Kellogg Business School. According to them, successful companies always define their strategies and differentiate their market. Examples: Intel, SouthWestern Airlines, Johnson and Johnson, Disney. The business is defined based on markets served, needs satisfied, technology adopted, and functions performed. Among product and technology innovation, customer intimacy and operational excellence, a company should excel in at least two parameters. A strategy learnt was customer-based profitability and activity based costing. The team also spoke of strategic alliances, i.e., cooperative relationships which went beyond joint ventures and licensing agreements—with vendors, logistics solution providers, even competitors. The transformation at GE during the Jack Welch era was dramatically presented to the candidates by James Bauman, Chairman, GE, who described the varied initiatives set in motion by Welch.

The panel made two suggestions for Sanmar: to explore the possibility of finding an external logistics partner for the Mettur complex, and one for joint power generation.

People Philosophy and HR Policies: The foundation for building a Performance Culture

Sarada Jagan explained the application of the group’s people philosophy and HR policies as the foundation for building a performance culture. She dwelt on the way the appraisal system works, the key result areas for individuals and teams, quantitative and qualitative appraisal, and how anomalies of the past had been addressed in order to aim for a reasonably fool-proof appraisal system.

This was followed by a presentation by Ramkumar Shankar on the mechanics of the compensation system in vogue and the changes now being built into it to make it truly meritocratic, reflecting the performance culture taking root in the group, minimising the risks of loopholes and anomalies. The HR mentors S Gopal, V Ramesh and C G Sethuram then led the discussions on HR and other issues of importance.

Sarada Jagan

Ramkumar Shankar

Building a Culture of Execution

Mentor: P Viswanathan

Team: (clockwise from top right) R Ramakrishnan, K Balasubramanian, Lavanya Venkatesh,
J Ramdas, S Venkataraghavan

The presentation told “The Tale of Two Businesses” to illustrate the ‘Key Differentiator between Winning and Losing’, taking the case studies of Overseas Sanmar Finance Limited (OSFL) and Sanmar Engineering Corporation (SEC). OSFL was the most visible Sanmar company in the 1980s, enjoying a large fixed deposit base and strong investor confidence. Its vision was to become an all India one-stop shop for financial services.

Post economic liberalization begun in 1991, reduction in duties, global recession, the South East Asian crisis, falling interest rates and political uncertainty changed the scenario dramatically.

OSFL’s dream run began to turn sour when RBI introduced stringent norms for Non Productive Assets for non banking finance companies. With corporate loans going wrong, the high overheads and cost of debts, the company began to post losses, leading to increasing loss of morale and staff turnover. It finally had to exit the business—which, it must be said, it did in style, honourably discharging its financial obligations with integrity and efficiency.

The panel described OSFL’s failure as a disconnect between its vision for tomorrow and what it could achieve today. It was unprepared for rapidly changing circumstances, and it failed to execute.

The presenters then took up the success story of SEC, faced as it was with a similar dilemma—of how it dealt with declining projects in India, a slowdown in the replacement market, changes in collaborators’ ownership and increasing overheads. Through threadbare SWOT analyses, debates on growth and return parameters and action plans drawn up based on consultation and agreement with the people who would execute them, SEC arrived at the new direction it wanted to take: To become the preferred supplier to its JV partners and to become a world class manufacturing organisation.

A Climate for Fostering Performance Culture: The Sanmar Landscape

Mentor: V R Venkataraman

Team: (clockwise from top right) Deepak Dave,
C N Purnananda, R Padmanabhan, C V Subba Rao, K Mohan

In their presentation, the panellists sought to find answers to the questions: Why is a performance culture important? Where are we today as a group? Where do we want to go? How do we create the climate for a performance culture?

The team explained in detail the initiatives of the group that will usher in the performance culture—the people policies of uniformity, transparency, appraisal systems, training programmes and reward systems, etc. The roles played in developing such a culture by the Sanmar policies on ethics, the group’s total cash-based compensation philosophy, the administrative support available in the group, the policies on decision making and accountability were also explained.

The panellists stressed the key attributes required to create a performance climate. These, according to them are: discipline, passion, creativity and innovation, team work, leadership, feedback and counselling and work-life balance.

The panel made some interesting suggestions for consideration by the Sanmar group. In brief, some of these are: Recognise the best knowledge sharer. Recognise performing teams by featuring them in Matrix and during Group Annual Days. Increase intra group awareness. Facilitate reading Performance Culture literature. Conduct Ethics Workshops for all employees.

The final session included a presentation by the HR mentors S Gopal, V Ramesh and C G Sethuram on the actions taken or proposed in their businesses for building a performance culture, and a wrapping up of the proceedings.