Monday, December 21, 2009

Caparo eyes 30% of revenues from India operations

S Kalyana Ramanathan / London December 22, 2009

UK-based diversified conglomerate Caparo Group expects a third of its revenues (sales) to come from India by 2011 against the present level of 20 per cent. While a sizable portion of the group’s presence in India is in the automobile component sector, it is planning to diversify its interests in India as supplier of components to the railways and in the oil & gas sector as well.

Talking to Business Standard, Caparo Group CEO Angad Paul said the group’s projected revenues of around £1.2 billion (over Rs 9,000 crore) by 2011 will mostly come from the investments completed over the last two-three years. The Caparo Group has a dominant presence in Europe and North America, with India emerging as a strong market for its component businesses.

Paul said revenues from India this year will be a little shy of Rs 1,000 crore. Revenues are expected to rise to Rs 1,600-2,000 crore in 2010 and to Rs 2,500-3,000 crore (around £400 million) in 2011. Also, in 2011, the group’s total revenues are expected to be around £1.2 billion, up from the present level of £650 million (nearly Rs 4,900 crore).

Lower demand for steel products and a general slump in prices drove down the group’s turnover by nearly a third from £950 million (nearly Rs 7,160 crore) in 2008 to the current year’s revenue of around £650 million, said Paul. The group, however, expects demand for steel products to rebound with 2010 revenues to be reinstated to £850-900 million (over Rs 6,400 crore).

The group’s share of revenues from India (in percentage terms) also rose considerably in the current year due to the slump in demand in the western markets. Based on its current business plans, Caparo Group’s top line is expected to be equally divided between Europe, North America and India by 2011, with each region contributing roughly around £400 million, Paul said.

Explaining the group’s ambitions in India, Paul said: “(The plan is) that we get the best customers, the best customer satisfaction, best quality and best delivery performances. It’s actually that simple. There is nothing world-dominating about it.”

Caparo Group in the UK was formed in 1968 by India-born British industrialist Lord Swraj Paul with a small engineering unit in Huntingdon (located about an hour’s drive north of London).

Today, the group has expanded to over 50 locations across the UK, North America, India, Spain and Dubai. It employs over 6,000 people worldwide. The Caparo Group established its presence in India in 1994 though a joint venture with Maruti Udyog (now Maruti Suzuki) and has a presence in over 16 locations in the country with primary interests in manufacturing automobile components. It is also a major supplier for Tata Motors’ Rs 1-lakh car Nano.

Angad Paul, the youngest among Swraj Paul’s three sons, was elevated to the role of Group CEO in 2003 with Lord Paul continuing as the chairman of the group. The group’s interests in India, which is currently restricted to automobile components and aerospace (to a limited extent), is set to expand as supplier of components to new sectors like railways and energy (oil & gas). With nearly 75 per cent equity held by the Paul family, there is no immediate plan to list the group either in the UK or India. Paul said that the immediate priority is to build size and scale in a market like India before contemplating listing in Indian bourses or raising fresh capital.

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