Sara plans expansion, diversification

The Rs 400 crore group had made a global acquisition of Huston-based Consolidated Pressure Control two years ago

The Sara group, an oil rig equipments company in Uttarakhand, has chalked out plans to expand and diversify its business in other areas with an aim to become Rs 500 crore company by the end of 2013-14 and float an Initial Public Offering (IPO).

The Rs 400 crore group, which is mainly into engineering and oil drilling equipment businesses, had made a global acquisition of Huston-based Consolidated Pressure Control (CPC) two years ago.

The CPC is a Houston-based company engaged in the business of manufacturing, supplying and servicing of control systems for surface mounted blow out protection units (BoPs). The CPC also supplies land rig units, BOP test pumps and other components used in the oil and gas industry.

“Our aim is to become Rs 500 crore company by the end of this year and then float an IPO,” said V K Dhawan, chairman of the Sara Group. But more than an IPO, Dhawan claimed that Sara Group is the first company to have 50 percent of the world’s oil rigs using its equipments following a careful planning as well as the expansion of the CPC.

For building CPC, a well-planned strategy was chalked out to identify its weaknesses first. Initially, the CPC was lacking in its international presence and there was no engineering and research support system.

“We combined the synergies of both CPC and Sara to build on and began targeting big contractors. Now we are working with the world’s 10 top contractors,” said Dhawan. This helped the group to increase its business volumes considerably. And soon, a modern engineering and research centre was also established at Huston.

Another big strategy that has gone well in the favour of SARA group was the reacquisition of 26 percent Sara equity from the National Oilwell Varco, a multi-billion US-based company, at the same price of 2007 when it was sold.

“We first sold this equity and then reacquired it in 2011 which has helped us tremendously,”said Dhawan. For the expansion purpose, the company is using its internal resources to raise funds. “We have created enough capacity to support the growth of our company,” he said.

During the past few years, Dhawan’s Sara group, which was mainly into oil and engineering equipments business, has diversified into pharma, herbs and publishing sectors. Dhawan is also planning to enter into hotel and real estate business with an investment of Rs 130 crore.

“We are planning to construct a four-star hotel with 117 rooms at Mussoorie-Diversion area here,” said Dhawan. Along with the Park Plaza hotel, Dhawan is also planning to construct a 100 service apartment, 48 residential flats and 8 penthouses.

The cost of each residential flat will be 30 percent above the market price due to various services being provided by the hotel, Dhawan said. A penthouse in the apartment is going to cost around Rs 4-5 crore, he said.“Our flats will be for selected people only,” he said.

Besides, Planet Herbs Lifescience Pvt Ltd, an arm of the Sara Group, has also entered into collaboration with Paulpenders company of Netherlands to produce derma-cosmetic anti-aging products.

“This is a profit-sharing arrangement where we will be getting formulations of the Netherlands company,” said Dhawan. Planet Herbs has also entered into a joint venture with Chowdhary Group of Nepal to produce oil extracts from unique and rare herbs which are found in the Himalayan belt. Planet Herbs makes energy products like Joules-24, Revicer and Foeton.

As the business expands, Dhawan has also found support from his two sons –Samir and Sumit who are now assisting him. “By the end of this year, we will be the largest BOP equipments in the world,” Dhawan avers.