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Something to prove

Published by Forbes on 1984-06-04

THE ODYSSEY of Swraj Paul began on a remote Himalayan hummock on a winter day 15 years ago. His young daughter had died of leukemia in London, where she had been taken for medical treatment. For 18 months Paul sought refuge in philosophy and ashrams and hermitages across his native India, and even the shrine at Lourdes. Then, while meditating that day on the mountain he sensed the way: To cope with life's travails, one must go back into the everyday world and cope with them there. "I realized that I had to get back to work again in order to come to terms with myself," Paul says.

"For reasons I cannot really pin down, I did not wish to settle down in India, where I could have joined my brothers in the family metal-bashing business or in trading. I wanted to make a clean and complete break with the past. I wanted to start anew."

That was 15 years ago. Today Swraj Paul is probably the best-known and richest Indian immigrant in Britain, a takeover artist with a chain of British metal-forming plants -- tubes, toys, tools, forgings and forklifts -- with assets of $200 million and 4,000 employees, plus tea estates in India and interests in sporting goods stores, oil and hotels.

In India, where Paul is fighting to take control of two of the nation's one making tractors, he is known as a most loyal friend to Prime Minister Indira Gandhi and her de facto ambassador to Europe. And he is beginning the search for properties in the U.S., in "the big mango," as he calls it.

When Paul came off the mountain, he rejoined his wife, Aruna, his twin sons, Ambar (who now has a graduate degree from Carnegie-Mellon) and Akash (one from MIT), and his daughter, Anjali, in London, where they had stayed while Paul was drifting through swami-land. On the strength of his family background -- his father had fashioned a respectably prosperous enterprise making buckets and brass fittings in Jalandhar, a city in the Punjab -- and his engineering degree from MIT, Paul obtained a bank loan of about #10,000. He used it to pany in Huntingdon, near Cambridge. This was the start of what has become a tube colossus, producing more than 36,000 tons of 170 different tube types annually, and a key part of his family-held Caparo Group, which in turn controls the publicly held Caparo Industries and Caparo Properties.

During the years when British engineering shops have been shutting, Paul has been buying, sometimes quietly and sometimes in noisy takeovers. Small potatoes, perhaps, by Boone Pickens' standards, they are nevertheless the stuff of sensation in the British press. After a little chopping and bashing and tender loving care, his acquisitions usually start making money.

"I have shown over this last decade that if you behave sensibly, are prudent in your corporate and personal lifestyle, if you take calculated risks, pick the right managers to run your companies, and if you manage men well -- then you can succeed and flourish," Paul says.

"Swraj Paul is one of the shrewdest and toughest businessmen I know, a man of vision who possesses a keen financial brain. As a financial house, we take a very good view of him," says John MacArthur, corporate finance director of Kleinwort, Benson, the London-based international merchant banking firm. "What distinguishes his performance is that Paul doesn't become obsessed with acquisitions. If there comes a moment when he realizes that to continue would involve far too much of a diversion for him, he's enough of a trader to get out."

There's one big exception to this -- "that India business," as Swraj Paul calls it. Last year he invested heavily in the textile company and tractor manufacturer, partly in answer to Prime Minister Gandhi's call to overseas Indians to invest at home and partly to get a foothold there. But the Indian managers, no friends of Mrs. Gandhi or her ally Paul and fearful of losing control, are in court trying to block him, which makes Paul determined to win, particularly since he has little respect for some of India's business types.

"Some people in India have started a smear campaign against me," he "Yes, I am determined to get what I wanted at the start. I will not be driven out by a smear campaign. I just will not accept that kind of defeat."

Paul has his scouts out in the U.S., looking for technology companies in the $25 million to $100 million sales range. "The U.S. is the ultimate in a competitive society," he .says. "Working in a competitive society is and can be very rewarding."

It's tougher, too. Paul has already stubbed his toe in New York City through a 3% investment in the Nova-Park luxury hotel group in Europe. The group got in serious trouble when it tried to renovate the old Gotham Hotel off Manhattan's Fifth Avenue. Nova-Park estimated the job at $30 million, spent $120 million and the job still isn't done. The group ran out of cash and is bailing out of the Gotham, but will have a management says Paul, who was named Nova-Park chairman when the troubles piled up. For Paul, business and family are intertwined. The twin sons, Ambar and Akash, are junior executives in Paul's enterprises, as is daughter Anjli. A third son, Angad, 13, is at school at Harrow. Ambar and Akash are both married and live in a modest, family-owned apartment building in London's fashionable Portland Place, from which all may walk to work.

"Walking to working" is a sort of family metaphor. Swraj Paul walked the streets of Birmingham and London and pounded on doors during his early days as an entrepreneur in Britain. It was all necessary to get customers, he says, and necessary also to convey personally to British clients that, although he was an outsider to their society, he could be relied upon to deliver what he promised.

"Walking to working" is also a metaphor in the sense that Paul insists on personally touring his properties and meeting his managers several times each month. A trip by car to Wales, Scotland and Birmingham is regularly undertaken by Paul and James Anthony Leek, his longtime aide.

"I've reached a stage where I think my main job is to manage men -- to manage them and to motivate them," Paul says.

FORBES traveled with Swraj Paul on such a trip, to a tube plant in Wales, to get a flavor of his style. His day started well before dawn, with nearly an hour of puja -- the Hindu prayer-and-meditation session undertaken every moming. After a vegetarian breakfast, Paul motors with Leek through economically languishing South Wales, planning the next round of expansion. There's also talk of Paul's interest in buying the Observer, Britain's prestigious but financially ailing weekly newspaper owned by industrialist-promoter R.W. (Tiny) Rowland. If Rowland ever sells, Swraj Paul is on the to-call list. No doubt the Observer would add prestige to his name.

At his Natural Gas Tubes, Ltd. plant in Tredegar, Wales, Paul hauls his bulky frame out of the back seat of the Mercedes and sprints into the building. This is an auspicious day. His tube company has made a healthy profit during the first quarter, while most of Britain's metalworking industry is in the doldrums.

As Paul trots down a corridor toward his tiny boardroom, he runs into Alan Powell, a craggy former miner who now is a foreman at this metal-tube plant.

"You're a fine fellow, Mr. Paul. You're one of us," Powell says, in his singsong Welsh accent. "My family thanks you." The tycoon turns around and grins. "You, too," Paul shouts back over the screarning of the industrial machinery.

The thanks were in behalf of Powell's 20-year-old son Kevin, long unemployed, who had recently been hired by Paul and trained to be an assembly-line worker. It used to be that sons joined their fathers down in the Welsh coal pits. But the mines are closing and sons and fathers are joining the welfare rolls together. Now Swraj Paul is reviving the father-son work tradition in his factory here.

"When I first came to Britain," Paul recalls, "many people had the feeling that Indians were crowding their country, that they were taking jobs away. I set out to change that erroneous perception. I have tried to show that we Indians are contributing vitally to the rebuilding of the British economy, toward strengthening this country.

"Why do I go on? Perhaps because there still remains the need within me to prove something."

Pranay Gupte,
Senior Writer and Global-Affairs Columnist


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