The head of India’s largest private shipbuilder is a low-profile adventurer on the high seas.
The moment you enter Sea Lounge, the tea room at the Taj Mahal hotel in Mumbai, you find yourself in a different time-space continuum. It’s a little unnerving, because for a change I am half an hour early for an appointment. The tea room, with its squishy sofas, big cane chairs on the verandah, and plush carpets with wave patterns, has been refurbished since the terror attack but its soul is still a throwback to the Swing Age, writes Arijit Barman. But today I have work to do. So I make myself comfortable at a window booth with a simple glass table and wait for P C Kapoor to arrive. It also strikes me that this actually is a great venue to meet Kapoor, India’s most passionate ship maker. At 5.30 in the evening, the view outside in technicolour is the blue ocean and a harbour full of bobbing sail boats, the odd yacht and bulk container carriers.
Kapoor is soft-spoken, avuncular and a reticent interviewee, especially in his office. He hates talking about himself, gets uncomfortable if you dabble too much in specifics about his companies and almost always steers the conversation towards macro, sectoral issues. Actually, a casual chat is more his cup of tea, quite literally.
I figure Kapoor is also tad tired. Business has doubled and he and his old IIT (campus mate and now business partner Vijay Kumar have the daunting task of managing their twin empires of building ships and operating rigs at Bharati Shipyard and the recently acquired Great Offshore. So, more work and even more travel. Both companies may seem alike, but are actually very different, requiring very different skill sets. And for a man who loves to stay below the radar, the Great Offshore takeover was all about big breaking news that the Street loves: white knights rescuing a sinking listed company, indebted promoters and pledged shares, counter offers from fleet-footed and bigger rivals. The reluctant newsmaker had overnight become the most sought-after strategist.
“Hope you have not been waiting too long,” Kapoor breaks into my thoughts. He’s on the dot. “This is close to work so I often come here around this time if I have a business meeting,” Kapoor sets the agenda upfront.
It’s Earl Grey for him freshly brewed. I would have preferred an espresso but the waiter glared because he probably heard me mumbling, so I quickly settled for the Assam house blend and some sandwiches.
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I begin by playing it safe, choosing to go back to what’s called “at the beginning” and I tell him that I come from Kolkata, and it turns out Kapoor, too, “has a strong Calcutta connection” via St Xavier’s School and IIT Kharagpur — “the best campus ever”.
His is a classic IIT-is-a-laboratory-of-talent story that has been retold ad nauseum Yet it’s always endearing. He met Kumar there, sowed the seeds of a business idea there while studying naval architecture and, in 1973, after a brief stint in Mazgaon Dock and the Andrew Yule Shipyard in Kolkata, both friends decided to jump right in with “a spirit of recklessness and a daring idea”. “Nobody in my family ever thought of ship building. I come from a family of textile merchants from Bareilly with roots in Lahore. But we knew this was it,” chuckles Kapoor, taking his first sip.
The tea makes him a little more expansive. “In 1991, we got our first big export order. We had to deliver three ships to Europe — a $15 million order in those days.” It was time for Bharati to set sail. In 37 years it has delivered 300 ships. It is the second-largest private sector shipyard with five yards at Ratnagiri, Thane, Dabhol, Kolkata and Mangalore. Group company Pinky Shipyard owns another one at Goa. Even though Bharati’s first order was from the Andhra government to build five ships in the leased yard of Kakinada, the focus for greenfield projects has been predominantly on the west coast. “It’s nothing conscious. We are exploring options even in the east coast, maybe as joint ventures,” says Kapoor. And one of those may even be with government-owned Shipping Corporation of India.
But it’s in Dabhol where the biggest test for the company is being carried out: India’s first indigenous jack-up oil rig, one that Kapoor proudly says “requires a very complex piece of engineering”. And it’s due to this Rs 1,000 crore-plus rig that Bharati had to step in and take charge of Great Offshore.
In 2008, Great Offshore needed a rig and the “daring spirit” of Kapoor and Kumar prompted them to take on a new challenge. India lacked the required expertise to build rigs, but the duo remained unfazed. So, at a time when everyone was busy chasing Tata’s acquisition of the marquee Jaguar and Land Rover brands, Bharati quietly bought out the historical Swan Shipyard in UK for Rs 250 crore. Not just that, post acquisition they dismantled everything – from infrastructure, machines and even manpower — and brought it to the Dabhol yard.
“Swan was part of the British heritage, even the cranes were heritage assets, but the company had no money to maintain them. Its lifeline, defence contracts, was drying up. So we had to convince people in the town hall meetings,” recollects Kapoor. Then came on board long-time collaborators Le Teourerno from the US, rig builders for 50 years and the core team was set.
So saving the rig was as important as saving Great Offshore when creditors acted tough and the company became a clear target of a takeover. Kapoor is candid: “We knew Vijay Sheth for years and did business with him for 16 years. There were Rs 1,200 crore worth of orders from Great Offshore at stake, which could’ve got cancelled and the price was attractive. It has been a strategic decision.”
But Kapoor does not want to get drawn into controversies. So no comments on the bidding war; the offers and competitive counter offers from rivals like ABG Shipyard. “Great Offshore is a strategic asset for anybody. So the interests were understandable,” that’s all you get from him. With a fleet of 47 offshore assets, Great Offshore even today is India’s leading offshore oilfield services provider. But managing two different listed companies – Bharati Shipyard and Great Offshore – is cumbersome and requires bandwidth. So I ask about the inevitable, a merger. “There is a thought process. It has been discussed and is debated. But nothing is concrete yet.” That’s some food for thought and a definite follow-up.
I get the feeling that Kapoor is much more at home when it comes to Bharati Shipyard, where the focus is clearly value additions and tapping the defence sector for the big orders. Defence for private sector shipbuilders is a new frontier that’s just opening up. “We have supplied 20 ships to the Indian coastguards. But we can do a lot more,” says Kapoor. “Our aim is to now set eyes on the medium-sized ships, on destroyers on the frigates.” The Goa and the Mangalore yards are capable of handling the large contract that may come about from the Indian Navy. Innovation is critical and Bharati has not shied away from a joint venture with Rolls Royce for specialised ships such as LNG-powered offshore vessels, which is nothing short of “a revolutionary idea”.
What strikes me about Kapoor is his hands-on approach. He’s still as much an engineer as he is an entrepreneur. But even then, he knows where to back off. “Between Mr Kumar (Vijay) and me, we split responsibilities even though there is overlap. It’s a small team,” he explains. So, while he oversees operations and business development, finance, Kumar is responsible for design and marketing.
But family plays a big role too. At the height of the Great Offshore takeover drama, the role of his son-in-law Chetan Mehra, MD, Weizmann Ltd, as a key “brain trust” surprised many, but Kapoor is simply bemused when I ask him that. “He was involved with our IPO in 2004. He worked on our FCCBs and, yes, he was helping us during Great Offshore. Other than being my son-in-law, he’s a professional first with diverse experience and what’s wrong if I seek his help? He’s also on the board of the company.” Touché.
Kapoor interrupts me at this point and is almost apologetic about it. Time’s up. As we leave Taj, we bump into a group of CEOs in the lobby who were heading for the launch party of the India edition of a foreign business magazine. But Kapoor has little time for networking parties and posing for the cameras. In a way he is still an outsider to the Bombay Club and would much rather keep it that way.