The Telegraph
Monday , December 17 , 2012
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SM Group eyes faster growth

Guwahati, Dec. 16: The Rs 800-crore Shewprasadji Mohanlalji (SM) Group — one of the fastest growing business houses in the Northeast — is diversifying into hotels and education with an eye on a turnover of Rs 1,500 crore by 2015.

The 55-year-old local company has been recording a compounded annual growth rate of 25 per cent over the last five fiscals ending 2010-11.

SM Group managing director Sarat Kumar Jain told The Telegraph: “The most important strategy was to develop the business verticals having synergy in nature. Besides, core values and guiding principles such as building trust, transparency, commitment to quality, valuing relationships and pioneering innovation have helped us.”

“Some of the manufacturing facilities within our group got good support from industrial policies to embark upon the growth path. We all know support of policies is required at the initial stage of operation,” Jain said. “We could have had the first five-star hotel in the Northeast but it did not work out despite having the statutory permissions. We had chalked our collaboration with Intercontinental Hotels Group but it simply did not work and we had to lose substantial investment.”

The group, which has businesses in steel, metallurgical coke, infrastructure, real estate and automobile, is now setting two four-star hotels in Assam and Meghalaya which are slated to be commissioned by 2013 and 2014. Both hotels will have 250 rooms.

The steel distribution divisions — SM Ispat Limited and SM Corporation — has been Tata Steel’s business development partner for the region since 2001 and deals in Tata Tiscon, Tata Pipes, Tata Agrico and Tata Structura.

The group is also thinking of making Dyna Roof and Bitchem pan-India brands.

While Dyna Roof is a roofing solution, Bitchem in the road sector has promoted the use of cold mix technology in roads in the Northeast. The group’s low ash metallurgical coke has consumers in Bhutan and is sold in other parts of the country.

“We are first concentrating in eastern region and then will expand to other parts of the country,” Jain said.

In the education sector, it is setting up a university in Kamrup district for which it has already got the letter of intent. “Land acquisition has been completed and the 30-acre campus is scheduled to be completed by 2015,” Jain said.

The university will focus on those areas where skills are most required in the Northeast.

About the company’s growth plans, Jain said, “We could even net a turnover of Rs 1,500 crore before 2015.”

The group’s growth is a pointer to the fact that companies of the region with sound business models have great prospects, thanks to the industrial policies effective in the Northeast.

The high growth trajectory has found mention in the draft Twelfth Plan that says it is encouraging to note that there has been substantial improvement in the growth rate in the Northeast, with average growth exceeding the national average during the Eleventh Plan.

“The growth rate of 5.3 per cent in the Ninth Plan improved to 6.2 per cent in the Tenth Plan, though less than the national average of 7.8 per cent. The average gross state domestic product growth of these states during Eleventh Plan improved to 9.95 per cent against 7.4 per cent at the national level,” the draft says.

“The growth of industry in Assam has picked up momentum in the fourth and fifth years of the Eleventh Plan and the good performance in the areas like transport and communication, banking and Insurance, trade and commerce, hotel and restaurant, real estate and business services has been able to generate employment both in the public and private sector,” it adds.

According to Finer chairman R.S. Joshi, the private sector has contributed a lot in the industrial development of the Northeast as many of these have diversified into new areas of operation.

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