Our growing family – Chairman’s perspective

Pictured: Sanjeev Gupta, GFG Alliance Executive Chairman and CEO

A planned approach to growth, prudent investment in long-term initiatives and a clearly defined guiding-values set will help pave the way for the ongoing success of GFG Alliance, says our Executive Chairman, Sanjeev Gupta.

The notion, relayed in media from the UK to Australia, is that Sanjeev Gupta and GFG Alliance is ‘spinning too many plates’ – parlance for growing too fast.

It’s one that draws a wry smile from the man himself (who spearheads the international alliance of businesses owned by the Gupta family).

“There’s no point saying, ‘let’s slow down, let’s change’ because that’s not who we are,” he says. “We are an ambitious and aspirational business and we keep breaking boundaries. That’s the DNA of one global family … and it will continue to be the driver as we move forward. Yes, there are challenges along the way, but we will overcome them as we have always done.”

To ponder the future direction of GFG Alliance, it’s worth considering its journey so far.

Though the Alliance formally came into existence sometime in 2016, it has operated informally since the early 1990s, when Sanjeev established Liberty House Group and started working closely with the SIMEC group, founded by his father Parduman K Gupta in the 1960s.

“The Alliance has been there since Liberty and SIMEC have been working together … it was a descriptive of the family-owned businesses and how they work together,” Sanjeev says. “The concept of GFG Alliance was always that it could become larger and wider.”

The Alliance now has a presence in more than 30 countries and counts an employee base of 30,000. “The biggest thing for us this year was the acquisition of ArcelorMittal’s European steel portfolio,” Sanjeev says. “With these acquisitions, Europe is by far our biggest concentration, with seven plants in six additional European countries.”

He adds, “But just because the Group grows geographically doesn’t mean there’s a lack of focus or attention on existing initiatives and parts of the business.”

Our Executive Chairman Sanjeev Gupta (right) talks with other members of GFG Alliance’s Strategic Board Jay Hambro (far left) and Paul Francis.

Strategic, sustainable expansion
Sanjeev is aware but dismisses the critics’ view that the Alliance has taken a ‘growth for growth’s sake’ approach.

“When you make a decision to move into a new jurisdiction, that is planned very deliberately – the decision to move into Australia, for example, was all part of a planned decision,” he says. “We don’t look at a move like that in isolation as one deal – we look to see what other opportunities are available across all our verticals.

“So, after acquiring Arrium, we did our SIMEC Zen deal – we did a critical acquisition in mining and we’re exploring opportunities in all our segments, whether its aluminium, engineering, banking or property.

“It was a very deliberate move – it started in the UK, we wanted to move into India, into Australia, into the US … and then expand into Europe.”

He explains that having broad stakeholder support – or “tailwinds” – underpins all GFG Alliance acquisition activity and helps provide a foundation for success. Important, too, is a focus on businesses which aim to grow and build local communities.

This approach to acquisition helps to future-proof the Alliance by building a strong network of autonomous businesses and an ecosystem to support growth at all levels.

Generally, the collective of businesses uses local resources and operates at a community level to drive and stimulate economic growth and generate profits. The businesses can supply others across the Alliance and, in doing so, become part of a global supply chain producing further value. Yet they exist separately in their own right, with their own customers, capital base, suppliers, governance and boards.

“Sometimes, this means each business has to tackle its own separate challenges, which appears out of sync, but this is a deliberate strategy as each business must carve out its own identity and destiny and not be over-reliant on the group,” Sanjeev says.

This model, known as decoupled integration, means businesses have flexibility and can be integrated in a hard or virtual form, or be decoupled and operate as an ‘island’ within the Alliance.

“Our bank [Wyelands] for example, doesn’t get involved in the majority of our businesses, so it’s decoupled, but there are some virtual benefits because our businesses who work with other banks get to understand better how banking works,” Sanjeev says.

“It could be that you’re in the mining business in Australia and primary steel business in Europe – it’s not necessarily that those mines are supplying the plants, but there’s virtual integration because of knowledge sharing and balanced outcomes within the supply chain.”

Sanjeev admits the connectivity aspects between the businesses may confuse both the workforce and external observers and commentators alike, but ultimately this model serves to ensure the long-term resilience of the Alliance.

“You need to have a balance of mature assets, like Keystone Consolidated Industries in the US, which generate cash flow and where we take a continuous improvement approach to improve capacity and start doing more downstream,” he says. “Georgetown is still very much in start-up phase – it is restarting from shutdown – so it’s about catching up and capacity utilisation.

“France is very different – the aluminium smelter is one of the best in the world so it’s about optimisation and then an expansion strategy aligned with our downstream businesses.” Sanjeev adds, “The decoupled nature of our model means we can have businesses which have fast growth, those that are mature and profitable, and those where turnaround is going to take longer, require investment and can indeed be painful.

“Sometimes mining is doing well and the standout, other times it’s steel, sometimes it’s recycling, but if you’re integrated across the value chain, you can balance things out, so you always capture value somewhere.”

Our Executive Chairman Sanjeev Gupta talks with employees

People and values are at the heart
Sanjeev believes that the “people” factor is an important consideration in any acquisition. “We don’t just look at the commercial opportunity,” he says. “We don’t enter into any business opportunity that requires massive social change in terms of redundancies or big restructures. Management is key because if it’s a good asset then you can use it and evolve it and apply it across other parts of the group.”

Reflecting on the growth journey of GFG Alliance to date – and the coming period of further growth – Sanjeev says the Alliance guiding values of change, family and sustainability will become increasingly important to unite the workforce behind a shared and common purpose.

“We are a family business, that’s part of our DNA, and for me that means treating everyone in the company and group, and the stakeholders and customers we work with, with the respect you would give a family member,” he says.

Change, Sanjeev says, is also a constant part of the history of GFG Alliance, which evolves and adapts daily in response to opportunities and challenge.

“And the third part is sustainability – we are interested in generational initiatives, in long-term investments which provide economic sustainability first and foremost. From that, comes social sustainability and environmental sustainability.

“These guiding values speak to everyone … they fulfil common criteria and that’s what we want, everyone aligned behind shared purpose and beliefs.”

1 Comment

    • Mark Resevsky
    • 17 September, 2019

    I have worked for large corporations for most of my working life and the fundamental difference between our business and a corporation is the word FAMILY …. and this is a great Family to be a part of ?

    Reply

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