The Sanmar Group’s expansion programmes – domestic and overseas, are the highlights of the Annual Report 2008. The Group is expected to grow more than 3-fold in the next three years and hence the theme and visual imagery represents the expansion and scale, the grit and determination of the Group in bringing to fruition its growth strategy.
From 1 country to 5 countries across 4 continents in 2 years. That is how Sanmar has grown.
Till about two years ago, Sanmar was an Indian business house with a manufacturing presence in India and marketing exposure across the world. The Group embarked on its transformation into a global player through its maiden international acquisition of an iron foundry in Germany and the second acquisition of a caustic soda facility in Egypt .
While the acquisition of Eisenwerk Erla, Germany, helped Sanmar foray into the iron foundry business and the niche global automobile castings market, TCI Sanmar, Egypt reinforces the Indian operations through raw material integration and an extensive market reach. The two ventures have not only established Sanmar on the global map but also reinforced the bottomline (low costs) and topline (new markets).
Late in the financial year, the Group acquired a steel foundry group in North America, imparting a transcontinental presence to its Metals segment across North America, Asia and Europe with manufacturing locations in India, Germany, the US and Mexico.
Matrix Metals LLC, with a revenue of US$150 million in 2007-08, has three steel foundries with a capacity of 10,000 tpa each – Keokuk Steel Castings, Iowa, Acerlan Foundry, Mexico, and Richmond Foundry, Texas. The foundries are complemented by NEPCO International, its trading arm, with pan-global sourcing relationships.
Manufacturing steel castings for pressure retaining valves and pumps, couplings, locomotive/transit cars, military and construction equipment, track and oilfield equipment — the new foundries complement the Group’s expanding Indian operations at Viralimalai near Trichy in Tamil Nadu, India.
Sanmar had been supplying steel castings products to the North American market through NEPCO, the sourcing arm of Matrix Metals. The acquisition will enable deeper penetration in the North American market through market proximity, while offering cost advantages. Matrix Metals benefits from Sanmar’s long-standing relationships and rich experience of providing foundry services to its joint venture partners. The expansion of Sanmar Foundries to 30,000 tpa will strengthen Matrix Metals’ global positioning through enhanced operational scale. The two foundries will complement each other through the transfer of services and products to enhance margins, reduce lead time and address new global segments.
The Sanmar Group committed to consolidated investments of Rs 5,500 crores (US$1.3 billion) till 2006-10 to acquire facilities in Egypt, Germany and North America and to fund various expansion projects These acquisitions and other strategic initiatives will translate into significant growth in 2010-11, by which time the Group would have
completed the first full year of operations of its planned projects. Meanwhile, the Group expects to post attractive returns from investments already commissioned.
Latest technology. More efficient. Wider portfolio.Stronger customer base. That is the Sanmar business model.
Over the years, The Sanmar Group invested in contemporary technologies to strengthen competitiveness across its businesses.
The Group acquired technologies through strategic means:
Metals
The acquisition of Eisenwerk Erla, Germany, graduated Sanmar to the new product segment of iron casting products. The automobile industry is the largest consumer of iron casting products; the acquisition widened Sanmar’s customer base to cover high-end European auto makers. More significantly, it provided Sanmar with an immediate access to patented technologies, a rich R&D base and advanced technical skills.
Sanmar upgraded Sanmar Foundries, (SFL) Viralimalai, India through full automation with latest technology. Sanmar Foundries’ 25-ton moulding line was automated with a thermal reclamation system and LPG installations. The Investment Foundry, automated the shelling process with a robot to improve process consistency and capability.
The upgradation was accompanied by capacity expansion at SFL and improved efficiencies that will enable it to address captive requirements of its Engineering constituents and castings for on-the-road and off-the-road vehicles in the domestic and international markets.
Sanmar Foundries’ operations were strengthened through the acquisition of Matrix Metals LLC, with three state-of-the-art steel foundries in North America with machining capabilities and a trading arm.
Chemicals
The Group converted its caustic soda manufacturing process at Mettur from mercury to membrane cell technology in August 2007, a superior and environment-friendly technology
enhancing energy efficiency. The PVC manufacturing facility in Cuddalore, currently under implementation, will use advanced imported
technology to manufacture PVC from VCM.
Going beyond statutory compliance, Chemplast Sanmar commissioned a zero-discharge facility in March 2008 that completely eliminates the discharge of liquid effluents and facilitates a 99 percent recovery of water from effluents. The complex process technology was sourced from an American multinational, making this initiative a pioneering one by a chemical process plant in India.
Shipping
Sanmar entered into an agreement with China Ocean Shipping Company (COSCO) for the conversion of one of its product tankers, Sanmar Symphony into a 53,000-dwt bulk carrier. A unique technology will replace the hull of the product tanker with a new hull redesigned as a bulk carrier at a cost far competitive compared to the current market price.