After successfully turning around and acquiring businesses in the UK and Australia, the billionaire entrepreneur is back in his home country
In four days, Sanjeev Gupta has traveled from London to Sydney, and then to Mumbai. After spending a day in Mumbai, the billionaire entrepreneur will be again heading to London.
But Gupta insists he is traveling less compared to when he was running Liberty House’s commodity business. “I was taking 300 flights a year, most of them at nights. So I used to spend more nights in the air than on the ground,” says Gupta with a smile.
Those were the years after he had founded Liberty House in 1992 while studying at Trinity College in Cambridge. He was 13 when his industrialist father, based in Punjab, enrolled Gupta at a boarding school in Kent.
Now a British citizen, Gupta’s first big step from trading to manufacturing came in 2013, when he bought a loss-making steel facility in Wales. He turned around the operations and saved almost 200 jobs. It was a model he would master, successfully re-launching 25 businesses, including some of Tata Steel’s facilities in the UK. The British media hailed him as the ‘white knight.’
Gupta and his reputation travelled to Australia, where he has made multi-billion dollar investments. And now the 47-year-old is back home.
His Liberty House, now a $6.8 billion empire, wants to buy stressed assets in India in sectors such as steel, auto and recycling. Moneycontrol met him before his company's bid for Bhushan Power & Steel was disallowed. In a free-wheeling conversation, Gupta – who in between attended to messages on his Apple watch - talks about his business philosophy, plans for India and his management style.
Excerpts from the interview:
Your turnaround strategy is underlined by the focus on low-carbon technology. Can you please explain your business philosophy?
Our industries - metals and energy - have been and will continue to be critical for the evolution of mankind. The distress in these sectors is an opportunity for us. We are turning headwinds into tailwinds. We have turned from primary to green steel (using renewable energy to melt scrap into steel).
In the UK for example, we have started an arc furnace that Tata Steel had closed. It was restarted by Prince Charles. Two years ago he had asked, ‘What are you going to do differently? Can you do it when Tatas couldn’t do it?
Now, it is a great endorsement for us that we have reopened the facility. It was a very tough journey. Nobody believed in the model.
You also invested in downstream facilities.
We are the largest components maker in the UK, and we supply to clients in automotive and aerospace industries. In Australia, we plan to launch an electric vehicle.
And last year you set up a Foundation.
I’m excited about it. We will basically take kids, put them in industry and train them for the job market. Our intention is to get involved in secondary education. We are trying something similar in Australia also.
While you are keen to invest in India, the circumstances – including the economy - is at a different stage when compared to the UK and Australia. How do you adjust your strategy to this reality?
Actually, the shift is the same. In India too, we are dependent on fossil fuels for energy and the balance comes from renewables. And India is already leaps and bounds ahead of the world in solar pricing. India is very good in doing entrepreneurial stuff in small to medium size projects. Not mega projects.
We are not looking at solar. But what is exciting is waste energy. We have a new project in the UK, where we are using waste in environment friendly way. Once it succeeds, we will replicate in other markets. India has a growing waste problem.
How important an opportunity is the sale of stressed assets?
Stressed asset sales is important for us because it gives a quick entry. We could do organically, but the asset sale leap frogs our entry into India.
There are three-four sectors that we are focused on - recycling, steel, auto and then other sectors like real estate, construction, financial services. Here we are interested but not in any particular asset.
Are you concerned about the valuations?
If they go beyond a certain level, we will sit back. Everyone has to build their own model and see what works best for them. Some assets may be more synergetic for some companies. It's perfectly logical.
We won’t pursue everything at any price. There is a number at which we will sit back.
Would you say Tata Steel has overbid for Bhushan Steel and Bhushan Power & Steel?
I would not say that. You have to show them some respect. They are among the longest and the most successful business groups. So they know what they are doing. We shouldn’t second guess a company like that. It’s one of the greatest success stories of our time.
While you are interested in Bhushan Power & Steel, Amtek and ABG Shipyard, there is also a second list of defaulting companies that has been put out.
We have a plenty of targets in the second list.
Like Uttam Galva?
I won’t speculate. But some are obvious ones.
The Insolvency and Bankruptcy Code is new for India. There have been some issues. How do you see its impact till now?
It can be frustrating but I have some sympathy for it as it is the first time. It’s changing history, something which is a great transformation.
Given the dynamics of the Indian market, would you look for a partner?
We are Indian. I would never underestimate India, but it’s not like we are going to Russia or China. India is family. We don’t feel uncomfortable.
Do you have a war chest for investments in India?
Concept of war chest is an old one. Today there is no constraint on capital. We never had to take on any debt. We don’t have external shareholder at the moment. If we do end up doing something bigger, and we need capital, we have access to it.
Have all the stressed companies you bought turned around?
All of them are profitable. All of them are above water.
Now you have businesses across continents. You travel a lot. On what time clock is your body right now?
Somewhere in the air… I don’t know (Laughs).
I do travel. But less than I used to, to be fair. When I was running the commodities business, I was doing 300 flights, most of them at nights. So I spent more nights in the air, than ground. It's less now.
Earlier I was literally living out of my suitcase.
How much do you involve yourself in each of the businesses?
I don’t get involved in day to day management of business. I have a great team. They run the business. I have regular review meeting. What keeps me running is M&A. That needs more travel, its more hand-down.
How much time do you spend with family?
Family…less than I should and less than I want to.
One last question. Will you bid for Air India?(Laughs). The short answer is no. But who knows. Aviation is a tough business. And you need some expertise in it. But you never know. We have got into sectors which I would have instinctively said no. But once you get into it and have a look, you realise you can make a difference. Something should happen to that business (Air India), that much I should say.