After falling into industry by chance the son of a ruined banker has fallen into money - and controversy. Andrew Davidson meets one of Britain's most intriguing, and elusive, businessmen.
Nat Puri has a lot of things going for him. As owner and chairman of Melton Medes, a holding company that sits atop a £250 million - turnover manufacturing and engineering empire, he is worth a considerable amount of money, and regularly cited as one of the most powerful Asian businessmen in Britain today.
In his adopted home town of Nottingham, where his charitable foundation has been a generous donor to educational projects, he is also respected as a philanthropist of note and highly regarded by the local great and good. He is even lucky enough to own not just one but two boxes at his favourite cricket grounds, Trent Bridge and Headingly.
Reasons to be cheerful? I would have thought so, but meeting him in his Knightsbridge pied-a-terre, I would have to say he looks rather tense. A short man, with a shock of white hair and goatee beard sandwiching a black moustache and sunken, dark eyes, he sits nervously entwining his fingers over his knees. When I remark to one of his executives later that he seemed more anxious at meeting me than I was of meeting him, the colleague laughed and said: 'Yes, he probably was.'
For Puri, who has made his fortune through a web of private companies which manufacture everything from carpets and hot-water bottles to gussets and Mercedes badges, is not, for all his good works, a public man. And recently he has had reasons to retreat somewhat further into his shell.
On the day we met, in January, he was still waiting to hear the outcome of his latest court battle with the Securities and Investment Board, an on-going saga of accusation and counter-accusation over Puri's handling of the pension funds of two Melton Medes subsidiaries. Puri insists he is innocent of any wrongdoing and for two years has been embroiled in an expensive legal battle to clear his name. All this, allied to his support for the new Labour Party and the growing power of Asian businessmen in Britain today, makes him an intriguing figure for some. It is not a position he looks very comfortable with.
The pensions row has already taken the gloss off a remarkable business career. Puri's skill has been to build his empire in double-quick time - he only started Melton Medes in 1983 - by the simple expedient of snapping up dead-beat firms and turning them round. He is, say those who have worked with him, a genius with figures, especially costs and tax, and a man who shows a cussed obdurance in the face of pressure. He never takes no for an answer, and although some are put off by his directness - his mangled, East Midlands-inflected English can make him seem rather abrupt - he is also an excellent persuader. All he lacks is that patina of slickness that those who run plcs, rather than private companies, develop: that essential quality which helps them deal with shareholders, analysts and hacks.
'The problem with plcs,' says Puri, perhaps tongue in cheek, 'is that there is too much PR and not enough work. I could have been a public company, but as a private company I can build it steady. I don't have to exaggerate anything.' Too many plcs, he adds, portray the good things to be better than they are and fiddle about with extraordinary items below the line. At this point it is worth pointing out that he does see both sides of the fence, as he is also chairman of a small plc, Delaney, manufacturer of fitted kitchens and bathrooms, which he rescued two years ago. But as everyone is always asking him if he is going to take the rest of his empire public, the answer right now is: no.
He has come far since his early days in north India. He was brought up, the son of a ruined banker, near Chandigarh in the Punjab. He left at the age of 27 heading for college in Britain with a degree in pure maths and £375 in his pocket. Till then his ambition had simply been to save enough to get a flat near where he studied. Now, at 55, he runs businesses in Britain, Germany and America and has a personal wealth estimated at anything upwards of £60 million. 'No,' he smiles, making the point before me, 'I've still not got the flat in Chandigarh but I've got one in Delhi.' Home, however, will always be his beloved Nottingham.
But perhaps the most surprising fact of his rise is that up until the early '80s he wasn't really a businessman at all. He was working as an engineer, first for the Nottingham-based firm F G Skerritt, then for his own consultancy. He built schools and hospitals, helped draw up plans for public works, and thoroughly immersed himself in the public sector. Then he borrowed some money to buy his old firm, picked up a right-hand man with experience in turning round businesses, bought the name Melton Medes off the shelf and just seemed, as the Americans say, to go for it.
At one stage in the '80s he was almost buying a company a month, cleverly shuffling bank loans around, always making enough to pay back a bit and borrow more. Eleven years later his empire boasts a carpets and textiles division, an engineering division, a paper and associated products division, a polymer division, and all sorts of investments.
Recently the recession and the huge weight of bank borrowing carried by his empire seems to have dampened his ardour. Profits at Melton Medes and his other holding vehicle Melham Holdings collapsed, barely topping £4 million pre-tax between them in 1993. But now things are looking up and he is back on the trail again. When we met he had just pulled off another deal, buying a Barnsley rubber company called William Freeman, and promising more, including a move into France. His aim, he says, is maybe to double the group's turnover to half a billion. 'It would be nice if we could hit that before I retire,' he says, pausing, then adding, 'well, semi-retire.'
Those who encounter him always puzzle over how he does it. 'The thing about Puri is that he usually gets his companies at a discount to book assets,' says one fan who has done business with him, 'which is a sure sign that they are seen as moribund by the vendors. But somehow he always makes them cash-generative.'
How does he do it? It is, he says, about choosing the right companies - typical Puri targets are making losses on turnover in the low millions - knowing the figures and understanding the cost centres, then being able to implement a plan that the current owners just haven't had the nous to put together. 'Any fool can buy but the trick is to buy and make profits from it. You must have the right deal, the right management resources and you must know what you are going to do with it, and who is going to be the man in charge. If you haven't got those, you shouldn't buy it. Unless you can improve it, it is stupid to buy because no one will sell anything to you cheap.'
Then, he says, it simply comes down to knowing the principle of manufacturing. Which is? Goods come in and goods go out. 'The key is to keep the distance between the goods in and goods out to a minimum and you will make a profit. Very few people understand that but it is the only principle of manufacturing. The day you let it lengthen you start increasing costs.'
Curiously, he says he fell into it all by chance. He had only stayed on in Britain after college to get his diploma. He had answered a few job ads for experience, and was twice offered jobs in Nottingham, where he didn't really want to work. 'The ads said London-Manchester-Nottingham,' he laughs now, 'so I presumed I could choose London.' But in the end he succumbed to an offer from Skerritt to start as an intermediate engineer on £950 a year. By 1969 he was a project engineer working on buildings in Nottingham and London.
He left Skerritt in 1975 after the company declined to take up some business he had organised in the Middle East with the Royal Jordanian Airforce. 'We were going to make 25% profit on the deal. I thought they can't turn down this opportunity. But they did.' He walked out with a month's salary, turned round a property deal and with the money went into consultancy. That grew like topsy and eight years later he was back with an offer to buy his old employer. It seemed to him like a reasonable way to expand his business. Then once he had bought Skerritt he bought another building-services company. 'It was just cheaper to buy than to build,' he says now.
Then why manufacturing? That, he says, simply stemmed from a chance meeting. Impressed by an executive at Dorada Holdings who was trying to sell him an engineering company he offered him a job. James Philpotts, now Melton Medes chief executive, joined even though there was nothing for him to manage. 'He had agreed to leave,' says Puri, 'so I had to buy more businesses!'
It's a novel reason to drive expansion, and not a little disingenuous. More often a mix of shrewdness and serendipity is apparent. Some of Puri's buys have simply been ways of getting cheap, second-hand equipment for areas he's interested in, others are just a calculated gamble. Puri buys them, sets out the plan, and Philpotts runs them. There are no Melton Medes board meetings or suchlike. Just a head office staff of 13, and a regular line of contact running from Puri through Philpotts to all the subsidiaries.
According to Philpotts, what drives Puri on is not money but the desire to build something substantial, the ambition to make a mark. Most agree that the seeds of his ambition were probably planted young, watching the collapse of his father's banking business after partition in India in 1947. As a Hindu in a predominantly Muslim area, his father lost most of his money as many of his clients either fled to Pakistan or were killed in the violence which preceded partition.
'There were no debtors left, only creditors,' says Puri grimly. The collapse affected his father's health and Puri remembers the family - he has an elder brother and younger sister - just scraping by. It was the kind of trauma that can have a deep effect.
It may account for his extraordinary single-mindedness. Little has daunted Puri, and in the past he has had no qualms about putting in bids for the likes of Rover and the former British Shipbuilders' yard in Sunderland, despite having not a jot of experience of either the car or shipping industry. He didn't get them, but he never loses his capacity to surprise.
The downside, of course, is that this kind of drive has turned Melton Medes into a ragbag of different interests. Gussets and car badges, scatter cushions, cess-pits and printing (a Puri subsidiary prints Variety and Billboard in America), engineering and construction. Where's the logic? Puri will have none of it. 'There is great business logic. It's just not logic in the sense that I am in one line of business. But business is business.'
There is also the problem of Melton Medes' habitually high gearing, now down to 100%. Problem, what problem, shrugs Puri. You either use shareholders' money or the banks, and it doesn't bother him that he has never been clear of bank borrowings since he started. Clearly being a banker's son has some advantages.
Yet with his singlemindedness has come a certain awkwardness. Time and again Puri has become embroiled in struggles which even those close to him acknowledge have been ill-advised. In the early '80s, while he was running his engineering consultancy, he fell out with the Department of Health and Social Security over a contract of work for a hospital, and took it all to court. 'The last thing you want to do in his line of work is take on the DHSS, but he did,' laughs Philpotts. And he won, too, netting £670,000 in damages plus expenses. 'That,' says Philpotts, 'provided us with part of the powder and shot that got us started.'
Then there is the British Siphon management buyout. Puri blocked it because he thought the price was too low. He had bought 5%, hoping to build closer links later on, but was so enraged at the management's attempts to sell it to themselves at less than they had offered it to him, that he promptly bought up over 25% and stopped the management taking the company private, at some cost to himself and to the astonishment of onlookers.
Then there were rows over figures at Delaney. 'He's certainly a man of strong opinions who likes to be heard,' says one colleague. He is also very sharp. Only last year he took Tarmac to court for selling him a carpet company with falsely inflated profits. He won more than £1 million in damages from the construction giant. 'Most of the companies I deal with are very reasonable but it doesn't mean I should close my eyes,' he says. 'Tarmac was a bad experience.'
Strong stuff, so it is ironic, to say the least, that Puri himself has come under fire recently. His long-running battle with the SIB over his handling of the Robert Fletcher pension funds has clearly got under his skin. The action dates back to 1991 when employees of the two Fletcher paper mills taken over by Melton Medes in 1986 consulted their union about Puri's use of the pension fund surpluses. A £4 million loan to Melton Medes had been sanctioned from the funds at an interest rate of only 2%. The loan had then been repaid in the form of shares in Delaney and Marling Industries, two quoted firms in which Puri had a large stake. The shares in both companies fell, leaving the pension funds looking at some large losses.
The SIB launched multi-million pound-proceedings against Melton Medes in May 1993, alleging conflict of interest, and by August Puri and Philpotts had been deposed as trustees of the pension funds. Puri countered with a claim for multi-million pound damages over the watchdog's conduct in investigating the affair. That was thrown out. At time of writing he had been granted leave to appeal, and was determined to proceed, even though many think he should retreat and lick his wounds. But it is a matter of principle, he says. 'If people do you wrong, if they say things about you which aren't true, how do you stop them?'
Yet, it has to be said, the case against him appears clear-cut. So how does he explain what happened? Puri sighs. 'I will tell you what happened. After Maxwell everyone got on a bandwagon. They wanted to get someone to make an example of, so they could maintain they were doing their jobs. In our case the problem was the major surplus, not the fact that funds weren't there. There was just too much there. And when we bought the company it was in terrible trouble, it should have been closed. If I was sensible it would have been closed. The Robert Fletcher greenfield site was making losses of £1.7 million a year.
'The ideal would have been to close the company, get the surplus back as the shareholder, sell the assets at a profit and bugger the jobs. But I am not an asset-stripper. That was the total opposite of what I want to achieve. My goal was to find a way of improving manufacturing ability. That company used to sell 6,000 tons of paper a year and employ 410 people. Last year it sold 11,500 tons and employed 310 people. That kind of improvement doesn't come overnight.'
By this stage in the conversation Puri looks exasperated, as only befits a man who has already stumped up £2 million in legal fees on the affair. He goes on to point out that he only put the original loan into shares because they looked such a good price, it was unfortunate the recession had knocked the stuffing out of any revival, and so on. He will not acknowledge any conflict of interest.
'I think the SIB has done lots of wrong things and if there is justice they should answer some questions,' he says quietly. Others whisper that what was really going on was an attempt to redistribute the funds in the face of a possible tax on pension surpluses. 'It wasn't an attempt to rip off the employees,' says one who knows Puri from Nottingham, 'but it certainly wasn't magnificent stewardship of the pension funds either.' Puri shrugs. 'I did what I thought right at the time,' he says.
The whole affair is given added piquancy, of course, by Puri's philanthropy and his left-leaning concern for social issues. In 1988 he set up the Puri Foundation, a charitable trust, with an initial donation of £1 million, and gradually he intends to pass over his shares in Melton Medes and its spin-off Melham Holdings. 'I have no children so most of the company will end up in trust. I'll fight to make sure it doesn't get broken up when I retire.' The foundation invests in projects close to his heart, particularly involving technology and education, and is a regular donor to Nottingham University.
His concerns, he says, are not socialist ones, but simply enlightened self-interest. 'I support the Labour Party because I think it is in the best interests of business people. Maybe some don't agree with me but more are starting to think that way.' He argues that if people cannot earn enough to live under a tax system then his business would suffer because he would be forced to pay higher salaries.
That pragmatism allows him to close the circle between his beliefs and his own wealth. He leads a modest life - he is married to a Dane and lives unostentatiously in Nottingham - and paid himself only £61,000 as chairman of Melton Medes last year. He did, however, vote himself £500,000 in dividends as 90%-plus shareholder. And despite pressure from others, he will not allow any other directors or employees of Melton Medes to own a stake in the group, only family members.
He argues that once he starts letting others in, it would be difficult to draw the line, and inevitably a power-base would be established against him. Even so, it seems strange that even James Philpotts isn't allowed a stake in the giant he has helped create. 'Let's say we have never had a meeting of minds on the subject,' says Philpotts wistfully.
Some people, of course, would suggest that it is one of the characteristics of Asian business to want to keep everything in the family, but Puri suggests it would be a mistake to stick too rigidly to stereotypes. 'I don't see myself as an Asian businessman, or as an Indian ex-pat,' he says. 'I'm just a Nottingham person who came from India.' Though if Lord Tebbit were asking, he adds wryly, he would have to admit he cheers for India in the Tests.
Born Mulan Pur, near Chandigarh, India
Punjab University, Chandigarh
Mine engineering and surveying apprenticeships, Madhya Pardesh, India
National College, London
F G Skerritt, Nottingham
Started own business in building services
Launched Environmental Design Consultants
Started small trading business
Founded Melton Medes when acquiring F G Skerritt; moved into manufacturing
Started Melham Holdings which acquired F G Skerritt from Melton Medes, and expanded into construction and printing
Launched Puri Foundation
Bought first substantial shareholding in Delaney Group
Bought Condor Structures, steel design and manufacture specialist
WHAT PEOPLE SAY
'He is so persistent. I've known him talking to people about deals and others have said, "Forget it, Nat, you're wasting your time". Two months later he appears with the deal.'
James Philpotts, chief executive, Melton Medes
'Frankly, he has a flair for making boring businesses work, usually in sectors which others have perceived to be in decline.'
A Nottingham observer
'In the light of the history, the case for removing Messrs Puri and Philpotts, and giving exclusive control to an independent trustee, looks overwhelming.'
The Financial Times, 1993, on Puri's handling of the Robert Fletcher pension funds
'Nat is a one-off, he's unique. He doesn't run with any pack, he doesn't pursue any orthodoxies and he really does feel strongly about the injustices in life.'
Sir Colin Campbell, Vice-Chancellor, Nottingham University.