Sanjeev Gupta: Looking back and looking forward
Over the past five years we have made incredible progress towards ...
In this episode, Sanjeev answers more questions posed on your behalf by our new presenter, Chloe Tilley, covering the current challenges facing GFG following the collapse of Greensill Capital.
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Show Transcript
| TIMECODE | SPEAKER | DIALOGUE |
| 00:04 | CHLOE | Hello and welcome to âSpokenâ â the podcast for GFG Alliance colleagues across the world. Iâm your new host, Chloe Tilley, taking over from Justine Greene. And this time we continue to look at the challenges that GFG Alliance is addressing, following the failure of one of its major lenders, Greensill Capital. Joining us of course is Sanjeev Gupta, Executive Chairman of the GFG Alliance, hello Sanjeev, itâs good to meet youâŚ.. |
| 00:27 | SANJEEV | Hi Chloe, lovely to meet you. |
| 00:29 | CHLOE | Now let’s begin by talking about something you said in the previous episode of Spoken, you were saying that most GFG businesses are doing well. So for colleagues listening now, can you elaborate about the performance across the group? |
| 00:43 | SANJEEV | Actually Chloe, since I last spoke on the podcast, the markets have got even stronger. So, we’re seeing an incredible super cycle in our commodities. Steel prices in general, including hot-rolled coil, has more than doubled. Aluminum prices are up almost 50 per cent, iron ore is up 75 per cent, so in terms of tailwinds, we’re enjoying some very, very strong markets. This, combined with all the improvement initiatives across all our businesses, over the many years, especially last year, is really reaping benefits now. And most of our major operations, which basically means places like our iron ore business in Whyalla, our Infrabuild business in Australia, our integrated operations in Galati and Ostrava, all of them are enjoying record profits. |
| 01:32 | CHLOE | In the UK, concerns over Liberty Steelâs future are of course high, what action have you been taking there? |
| 01:38 | SANJEEV | Yes, so you’re quite right, Chloe. The major operations I mentioned are doing exceptionally well, but there are challenging spots within our alliance. So the UK is one of them. The UK has, in my view, a lot of promise. We’ve done a lot of turnaround in our businesses, and we’re definitely on a good journey. But, it does require more financing, and hence, it is struggling at the moment with the lack of funding. But despite that, our UK businesses are managing. So, we’ve taken some very strong self-help initiatives, and our customers in particular have been very helpful. They’ve allowed us to reduce terms, in terms of paying us sooner, they are, in some cases, even paying us in advance, which has allowed us to restart our furnaces, for example, at Rotherham. And some of our downstream operations and specialties as well. All the non ss plants are actually in reasonably good shape, despite the current situation. And are managing to keep things ticking over. What we need in the UK is to find working capital, which we’re working on in earnest, and with that, those operations will be able to get on a better footing given the current market conditions. And then, of course, we still have a journey in places like Speciality, with the Aerospace business having been impacted, we still need to complete that journey. So all of that is, in my view, a promising future for the UK steel business. Not easy, and a lot of work still to do, the journey’s still definitely well ahead of us, rather than behind us. But, I’m committed to that, and I think we will achieve greater success in the UK in times to come. |
| 03:16 | CHLOE | I understand that the news from ALVANCE in France does remain challenging? |
| 03:21 | SANJEEV | Well, actually, ALVANCE, when you say ALVANCE, actually the main operations, Dunkirk and Duffel, are doing well. Similar to Steel, they’re enjoying the current market conditions. But, unfortunately, you’re right, our downstream businesses, which is Wheels and Chateauroux and the two businesses in Portieux will be put into voluntary administration. These businesses have been struggling since we bought them, they’ve had some real headwinds, mainly in the automotive sector, they’ve lost their main customer base, I mean one of the businesses in Portieux Iron Foundry, for example, has lost 75% of its order book from its customer. They were very dependent on single customers, and there just isn’t a long term future for those businesses. We’ve tried very hard, the group has spent quite a lot of time and money over the last few years, since we’ve owned them, to try and find a viable future for them, and I was very much committed to finding that, but in the current situation, the current circumstances, we haven’t found a sustainable solution. So, it was felt, together with our employees, that the best outcome for them would be to put the business through administration and look for a different future. |
| 04:31 | CHLOE | The way the GFG Alliance is organised has come under scrutiny. Can you restructure in any way, to enable the better-performing sectors of the business to support those parts of GFG not doing so well? |
| 04:44 | SANJEEV | So Chloe, important to say that first of all, that kind of has been the philosophy of the group, and its business model, let’s say. The way our successful businesses would support the businesses which are up and coming. And it will also, as we go forward, continue to be that, and especially with the incredible market conditions and business performance, some of our businesses are enjoying, we will be able to refinance them and overall then, eventually release capital also to support our businesses like the UK which have a bright future but need funding. |
| 05:16 | CHLOE | So as things stand, will the businesses across GFG have the cash flow that they need to continue to meet their current needs? |
| 05:23 | SANJEEV | All our businesses are obviously very much practising the Project Athena, which was launched some weeks ago. And this is exactly designed to do that. I.e., each business is required on a daily basis to report on what it’s doing, how it’s optimising its cash, which has many different measures. I mean, largely around optimising its assets and working closely with its customers to optimise cash flow, which means that, given the market conditions that most of them are basically managing to enjoy a healthy cash flow, and some are managing with greater support from customers, but are managing. |
| 06:00 | CHLOE | OK Sanjeev â next, letâs focus on allegations in the media. |
| 06:04 | Sound effect | |
| 06:08 | CHLOE | Sanjeev, thereâs been concerns raised about invoices issued by GFG in connection with the Greensill lending. Can you explain this further, and what’s your response to these claims? |
| 06:17 | SANJEEV | Chloe, we have been quite open in explaining how Greensill operated, most of our debt facilities, based on this prospective future Greensillâs programme. And we were not their only customer, they had several customers with whom this was deployed with. A good example is Bluestone Resources, it’s a coal business in the US. But the way sometimes some of the media has portrayed this is concerning, and to be absolutely clear, we refute any suggestion of any wrongdoing and will defend our positions robustly. |
| 06:48 | CHLOE | Now, another allegation is about web domains, similar to those owned by commodities trading businesses, being registered to GFG? Can you explain the situation here? |
| 06:57 | SANJEEV | Now, I mean look, this is a serious allegation which we’re taking very seriously, and we’re dealing with it head-on. We’ve launched a third party inquiry on this matter, and there is, you know, strong and immediate action is being undertaken to investigate. All I can say is that the initial findings by these third-party investigations are showing that these domains were never actually used, but more information will come to light. And if there is anything which comes out of it, we will take immediate action. |
| 07:25 | CHLOE | Sanjeev, do you feel that the ongoing press attention in any way is affecting GFGâs ability to resolve the current challenges that the business is facing? |
| 07:36 | SANJEEV | For sure, it does. It impacts customers, it impacts supplies, it impacts insurance companies. It raises concerns about the ongoing future of those businesses. Thankfully, markets are strong, so that’s sort of a counter-force in our favour. And also, the resilience of our employees is, of course, something which I’m very proud of. And that is my key concern, indeed, is my employees and their families and what pressure this causes them, which is why I’m keen to have regular dialogue through this medium of podcast. |
| 08:09 | CHLOE | OK â in a moment, letâs get an update on the refinancing of GFG. |
| 08:13 | Sound effect | |
| 08:16 | CHLOE | Sanjeev, how are discussions progressing with Greensillâs administrators, Grant Thornton? |
| 08:23 | SANJEEV | Our position with Greensill of course, is fundamentally adversarial because we’re defending the facilities we had and so on. But, I will say despite that, there is positive dialogue and cooperation with Grant Thornton and the creditors. We have regular discussions, and you know, we’re trying to find common ground, both in terms of sharing information and also trying to look for positive ways forward. |
| 08:48 | CHLOE | Of course, the big question is whatâs happening with refinancing. So whatâs the very latest? |
| 08:53 | SANJEEV | Yes, that is definitely the way out, and we have very good discussions with a host of different lenders, in particular, the first business which will be refinanced will be Australia, and that is imminent. It’s weeks away, rather than months away. I think that will be a massive positive signal to all our customers, suppliers, the market in general when we are on that journey of refinancing our businesses one after another. I’m confident that we will achieve refinancing, but it’s because our business is so spread out across the world and each business is different, and separately funded and so on, that it takes time to get things done. But, one by one, we’ll get to all of them. |
| 09:32 | CHLOE | On a personal note, I know that you’re currently based in Dubai, are you planning on changing that soon? |
| 09:37 | SANJEEV | Chloe, Dubai is the perfect location for me and my family to operate out of for now. I have to manage this crisis obviously hands-on, so you know, literally the first thing in the morning when I wake up I’m on with Australia, and the last thing in the night when I go to sleep I’m on with Europe and the US. Throughout the day, it gives me the ability to use all my waking hours addressing my business and my issues. But, I am keen to get to the businesses and meet people face to face, especially my customers, I’ve not seen many of them for some time, so as soon as travel restrictions, COVID travel restrictions in the UK, in Australia, in Europe, are lifted I will definitely be trying to get in front of the customers and the employees around the world. |
| 10:22 | CHLOE | And finally, what would you like to say to GFG colleagues at the moment, many of whom are understandably anxious? |
| 10:31 | SANJEEV | It’s a time where we all have to continue to be brave. It’s grueling, I was talking about this to somebody this morning, you know, you spend day after day, morning to night, fighting. There are no weekends, there’s no time off, there’s nothing. It’s constantly a fight at this moment. But, our businesses are good businesses, they’re doing well, they have a viable future, we have to refinance. Some difficult decisions are required which we’re taking, but overall the group is a good business and it will come out of this stronger than before. |
| 11:01 | CHLOE | OK, Sanjeev, thank you for joining us and look forward to speaking to you again shortlyâŚ. |
| 11:05 | SANJEEV | Thank you, Chloe. See you again. |
| 11:07 | CHLOE | Weâll be back very soon to once again keep you updated with the very latest news. Until then, from me Chloe Tilley and Sanjeev Gupta, itâs goodbye. |
In general I liked the interview, but we didn’t talk about Italy. What you can say about Italy … and I’m talking about Liberty Magona Piombino?
Pourquoi ne parle-t-on jamais de Liberty Liège Dudelange ?