Chemanex applies MTI’s bold approach to re-structuring a legacy business

Chemanex PLC, a leading player in the chemical industry for more than four decades, successfully concluded a major business restructuring exercise with MTI Consulting, thereby rationalizing many of its business units/operations in order to focus on its core business.

The rationalization, based on a detailed consulting assignment carried out by MTI in 2015, and re-visited in 2017/18 as part of the ‘CIC Re-Strategizing 2020’ project (for which MTI was retained by CIC Group), resulted in rationalization of all operations of Chemanex, with the exception its Local Chemical Trading business.

The Business Units which were rationalized included the export business, the retail paints business and support services. The relevant subsidiaries handling these operations were also rationalized, or have been identified and are pending rationalization.

The intensive restructuring exercise, for which MTI was retained in 2015 and 2017/18, involved in-depth research into the operations and performance of Chemanex in comparison with the industry and competition. This included a pre-business appreciation; insights gained via one-on-one sessions with staff and management; site visits, including to manufacturing locations and outlets; business unit appreciation; consulting workshops; financial analytics; desk/online research; and internal strategizing sessions.

Based on in-depth research and analytics, MTI formulated the recommendations to the Board of Directors on possible courses of future action, taking into consideration Chemanex’s strengths and the current/emerging market environment.

Accordingly, the Board of Directors of Chemanex decided to rationalize the operations of the business, which included granting of a Voluntary Retirement Scheme (VRS) for staff, thereby resulting in a substantial reduction in staff numbers.

“The restructuring of Chemanex was driven by the need for greater alignment with changing market dynamics, and for undiluted focus on the core operation of the business,” Chemanex Chairman Rimoe Saldin said. “By trimming the excesses and focusing solely on the core business, the outcome of this restructuring exercise with MTI positions Chemanex on a path towards sustainable growth in the long term.”

“Circumstances can at times require radical measures, as opposed to ‘cosmetic’ changes to a business,” MTI Consulting CEO Hilmy Cader said. “The Board of Chemanex should be commended for their courageous decision-making.”

Set-up in the ‘closed economy’ era during 1974, Chemanex is listed on the Colombo Stock Exchange and is a member of the diversified CIC Group. Prior to restructuring, the company exported its products to over 25 countries.

MTI Consulting is an internationally-networked boutique management consultancy, offering advisory services in strategy, strategic planning, corporate re-structuring, process reengineering, performance management, international market entry, feasibility studies, due diligence, corporate finance, M&A, HR, executive search / head hunting, marketing strategy, branding and market research. Since its inception in 1997, MTI has worked on over 630 assignments in more than 43 countries, covering a diverse range of industries, clients and business challenges.