You have been buying distressed assets in recent years. Where does the money come from?
Liberty is in its 26th year. Our businesses have made money all through their history. So, it is accruals. Let’s say, family money or equity, and we sell off surplus assets — property and stuff — not businesses. That is where the equity comes from. We don’t like debt at the corporate level but we lock in the value and monetise that value in case of a specific asset that can be structured. Typical corporates have debt. We don’t as yet.
What is your turnaround strategy?
Each situation is different. Common themes would be to look at businesses from a different light. For instance, recycling old steel rather than making primary steel. Integration is another model. We save 30% of our power costs because we have our own power business, and our banking business helps. The biggest issue is debt. We buy businesses without debt. We bought Adhunik Metals for less than 20% of its debt.
What do you think of the Insolvency and Bankruptcy Code?
It is frustrating at times as things take forever. But if you look at the history of the country, it is quite a watershed moment. If it was in the UK, and if you were the highest bidder, you would automatically get through. In India, there are all sorts of other complications and you might still risk not getting through even if you are the highest bidder. It is not logical. You have to keep fighting against different currents. Bhushan is a good example. Even though we are 10% higher than the Tatas, there is still a risk we might not get it, which is crazy as there is nowhere else in the world where that would be acceptable. India is still driven quite emotionally rather than rationally.
Why have you suddenly entered India?
You should be asking why haven’t. I am of Indian origin, with strong roots in India. It’s one of the fastest growing economies in the world. It is the biggest population in the world and growing, one of the youngest populations, one of the lowest per capita consuming economies in the world, which means we have all the growth ahead of us. But it is a difficult place to do business. You can’t predict things entirely. It is tough to work in such environment. It soaks up a lot of time and effort. We have DNA which fits, so we can handle India even if it is tough.
What other sectors are you interested in India?
In steel. There are a few others we are interested in. The biggest one is Bhushan, which is still being fought out. It is one of a handful of plants in India, which has the infrastructure to be a 10-million-tonne plant. In India, to create new large-scale capacity is very difficult. We are also going for ABG Shipyard. We will win it. It is a closed shipyard right now. We will scrap the ships and make steel. The way breaking ships is done in India and Bangladesh leads to lots of oil spills, accidents and hundreds of deaths. We will do it using big ship lifts mechanically and break it in an environmentally acceptable way. We also plan to invest in power in India. We are in the process of buying a small business in power, which then will become our springboard to get into the power sector.