LIBERTY’S SANJEEV GUPTA PLANS ACQUISITION IN INDIA

Liberty House, worth $6.8 billion, has set its eyes on the difficult yet promising Indian market. On a visit to India, its executive chairman SANJEEV GUPTA talks to

Aditi Divekar about lower returns on investment from the India business and his plans to bid for Tata Steel’s stripes business. Edited excerpts:

What is the purpose of your visit to India?

We are examining various acquisition prospects in automobiles, metals, power and even financial services. We are in talks with major banks. There are specific things being discussed but I cannot disclose details at this juncture. We are hoping to make an acquisition in one of these sectors in 2017. We are ready to invest anything from $10 million to $100 million, depending upon the deal. We are also looking at steel for investment, but I am a little apprehensive about it since the industry is debt saddled. I won’t say we are not looking at it at all, but a lot depends on the deal.

How do you see business prospects in India?

Doing business in India is difficult. However, this is the market of the future. The issue in India is its business environment and politics. It is much easier to do business in the US, UK, Australia or Canada than in India. Here one has to put in a lot of effort and even after that the return on investment is poor. It is only that the promoters of Liberty House are Indians, and so there is a desire to have something in India. India is a place for long-term plans, if you are looking at something quick, this is not the market.

How are you planning to expand the speciality business acquired from Tata Steel? Are you interested in their stripes business as well?

The deal for the speciality unit is done but we have not taken the keys as yet. There is a small process that remains to be completed. In the next few months, it will be done. We are going to make additional investment in this unit, it has already been worked out, but it has not come to a point where we can talk about it. There is a lot of latent capacity at the plant which needs working capital investment and not capital expenditure. The unit can make 1 million tonnes but is making only 200,000 tonnes. That needs to be ramped up and it can be done overnight without much increase in cost. Once we go to 1 million tonnes we will make fresh hires at this plant. Regarding Tata Steel’s stripes business, they are solving the pension issue. If that is sorted out and the Tatas put up the plant for sale, we will bid aggressively. We are interested in buying this plant.

Liberty House is making a lot of acquisitions across the globe. What is your big picture?

The plan is to have a diversified portfolio. We don’t want to be in one market and in one industry. The plan is to have a separate company for every business with its independent balance sheet, own management, resources, assets and debt. Liberty House needs to be looked at more like a private equity firm rather than as a group.

How is the business environment after Brexit?

It depends on which sector you are looking at. If it is the industrial segment, it is good. Brexit means businesses have to focus on the British market. Growth in the domestic industry has gone down to 10 per cent from 30 per cent earlier. This clearly means there is a lot of room to grow. In the financial services segment, there is some nervousness. From our business point of view, it is good. Those businesses that are dependent on Europe will suffer.