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The broader view

Turnover tripled in six years, workforce doubled – the global Caparo Group looks like an unstoppable force. John Pullin asks the man behind it where its future lies

Angad Paul doesn’t want to be pigeonholed. You ask him whether he sees his Caparo Group as a UK firm, an Indian one or what, and he does not not answer. But he makes it plain he sees the question as pretty irrelevant.

Don't pigeonhole me: Angad Paul looks at the big picture

Don't pigeonhole me: Angad Paul looks at the big picture

Ditto about business sectors. Automotive? Materials? Steel? Aerospace? Yes, he says, patiently, Caparo is in all of these, but no, he wouldn’t define the group that way. “People get so hung up on definitions. I’m not,” he says.

But there are, of course, some definitions that are inescapable. Caparo is a privately owned group set up by Angad Paul’s father, Swraj, now Lord Paul, who bought a series of businesses, mostly in steel and other metals and mostly in the UK and the US.

Angad Paul took over from his father as CEO almost six years ago. Through growth, acquisitions and moving into new markets, as well as a hefty dose of materials price inflation, what was a £330 million turnover group is now bigger. “My finance director tells me we might break a billion this year,” he says. The 3,000 people have become 7,000 “and it will be 10,000 by 2010”.

The unwillingness to be categorised should not be equated, though, with a lack of strategy. So when he took over Caparo was, he says, in steel and aluminium and “the strategy was to grow in aluminium and to move into other materials as we’ve done with composites”.

There was a strategy too, to move geographically into India, where Lord Paul had come from but where the group businesses had been retained by a different branch of the family. That has been done and Indian plants are now an important part of Caparo.

In fact, says Paul, the international strategy is to divide up the world into thirds: Europe with Eastern Europe; India and the subcontinent with the Middle East; and the Americas, North and South. But instantly he’s told you this, you see a flicker of unease. “The world is changing so fast. I’m wondering if I need to create a fourth for South-east Asia and then a fifth for Africa.”

This unwillingness to be pinned down on exactly what and where isn’t because Paul regards geography as unimportant. Rather the opposite. “It’s horses for courses,” he says. What’s right for one market isn’t necessarily right for another, and that applies within countries or regions as well as globally.

“Everyone talks about the globe becoming smaller and in some ways it is in that you can buy fashion items and such like anywhere. But in truth it creates a bigger diversity in which each place’s particular needs are constantly moving and at a different pace. It’s a matter of us being open to the diversity that exists.”

So rather than being constrained by geography or sector, Paul looks for businesses that add value. India is there because of family ties and because it’s a growth market in itself, not for a short-term gain from exporting UK jobs.

As a family firm, he says he can afford to take it calmly. “It’s your job as a journalist to pigeonhole things and look at the short-term window, and it’s the same for hedge fund managers and venture capital people and so on. For me, the only skill I have is that I look at things with a broader view. Without that skill I’m not going to survive.”

Niche market: Paul is excited by his F1-style technology demonstrator

Niche market: Paul is excited by his F1-style technology demonstrator

That broader view, the need to look at Caparo businesses “from cradle to grave”, means not being afraid to get things wrong. “One of the many things I learned from my father is that there are no bad businesses, only bad managers,” he says.

He reckons that a 60:40 success rate is a good aim and then boasts a little that maybe Caparo is slightly ahead of that. “Without getting a few things wrong you can’t get things right, and we know that predominantly what we’ve done has been good.”

Certainly the past few years have been an acquisitive period for the group. As you might expect, Paul doesn’t have much truck with the received wisdoms about where to invest. “Responding to the market is really all that matters,” he says. “I wouldn’t have bought 22 companies in the UK in 2006 if I thought it was all going to go tits up. There are more cars produced in the UK now than ever in history and there are still more cars produced in the UK than in India, I think.”

Engineers, he reckons, are apt to forget the macroeconomic factors that can change the relative competitiveness of countries and companies very quickly. They can also, he adds, underestimate the potential impact of the unpredicted, such as natural disasters. It’s all part of taking the longer-term view that a family-owned firm can afford, he says. “I come from an esoteric rather than an empirical background,” he explains, though there’s an MIT degree in economics in there somewhere.

It’s also part of what might be seen as a higher level strategy that Paul pursues “relentlessly”. He may be fairly dismissive of being categorised, but he’s less averse to being seen as in search of value-add opportunities – opportunistic, looking for profitable niches or under-performing businesses with a bit of headroom to grow.

This leads him into areas that might be seen as unpromising, such as UK manufacturing. He is, he says, excited by the large number of niche vehicles being developed in the UK and has put out a technology demonstrator of his own.

Caparo’s future, he says, is in manufacturing. “Value addition is about making things. Everything we do is surplus to requirement – we really don’t have any requirements except food, water and shelter. So the things we are creating are about the whole notion of value addition, and I believe that without manufacturing you’re not adding value. What we’re good at in Caparo is making things and helping other people to make things.”

But if manufacturing is at the core of what Paul wants Caparo to be about then there are other words he stresses: quality, service and integrity. As the custodian of a family firm he says he wants his legacy to be a group that stands for something, and of those three values integrity is what he wants most. Perhaps, if he achieves it, he wouldn’t mind, for once, being pigeonholed as such.

VALUE ADDED

One of Angad Paul’s precepts for Caparo is that he is trying to drive the group “further up the value chain”. Where the company used to be a supplier mainly of metals and basic metal products, he’s invested in design and engineering. So what’s it doing building the body panels for the world’s cheapest car, the Tata Nano (below)?

Paul isn’t apologising. “The questions I ask are do I add any value and are the margins going to be good enough for any factory I set up?” he says. The answers to both were yes. “And over time and with increasing volume the margins may shrink a bit but we may be able to do some value engineering to make them grow again.”

Paul believes that markets and cost advantages are always fluid. And he’s not afraid to be controversial. “I have no doubt that Tata would find it difficult to produce the Nano at the price they do without being a steel producer too with the lowest-cost steel production in the world,” he says.

That advantage isn’t geographical: in almost the same sentence, he’s expounding on why the US, with its installed base of infrastructure and a currency heading south, is well positioned to emerge as the low-cost manufacturer to beat all others in years to come.

“It’s possible that in the US if you adapted plants the Tata Nano could be produced even cheaper, and that’s partly because steel prices are higher in India.”

MOVIE MOGUL

Angad Paul’s definitions of manufacturing are fairly broad. Most of his business interests are in materials engineering, starting from metals, moving into composites and components, adding value through design and engineering.

But not just in engineered products. What is manufacturing?” he asks, rhetorically. “It’s making things. And one of the things I make is movies. To me it’s a manufacturing process.”

It’s been quite a lucrative process. Paul was executive producer on Lock, Stock and Two Smoking Barrels and on a subsequent Guy Ritchie film. And elsewhere. His Baker Street office in London has the posters on the walls.

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The broader view

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The broader view