Investors push Boral shares up 15pc as Ryan Stokes get his man Vik Bansal

Vik Bansal starts at Boral at the end of the year. Twice now in the Australian market he has delivered a remarkable uplift in value for his shareholders.

This time last year Ryan Stokes was racing towards 70 per cent control of building materials business Boral with a textbook acquisition strategy.

On Wednesday he pulled off another coup, luring veteran industrial leader Vik Bansal away from Infrabuild, the steel manufacturer and jewel in the crown of Sanjeev Gupta’s GFG Alliance. Shares in Boral soared 15 per cent on the day.

Bansal starts at Boral at the end of the year. Twice now in the Australian market he has delivered a remarkable uplift in value for his shareholders.

The first was a six-year stint at Cleanaway where he turned around the waste management and recycling business.

The second was at Infrabuild where he has been driving efficiencies and lifting productivity. In March Infrabuild reported a doubling of profits in the December half.

Bansal’s track record aligns well with Seven Group’s “owner’s mindset”. His experience in industrial management, recycling and decarbonisation makes him a lead pick for the challenges facing Boral.

“We have always seen that Boral needs disciplined execution to deliver on its potential,” says Stokes. “It’s something we have delivered across Westrac and Coates and we see that potential unlock within Boral as needing that type of leadership.”

Bansal relishes the task ahead. “It is a quality business, amazing assets, brand and team and so I’m just fortunate enough to be able to choose between Infrabuild and Boral. Seriously you have to pinch yourself to be in a circumstance like this,” he tells The Australian.

In the last 12 months Boral has offloaded $4bn of assets, taking the company out of the US and returning capital to shareholders under CEO Zlatko Todorcevski. The company is back to what Seven has always been most attracted to – the Boral Australia business.

Stokes says the next stage needs a different form of leader who can drive value in a complex market with radical shifts in input prices, especially energy. Twice this year, Boral has lowered earnings guidance as rising freight costs and floods squeezed the bottom line.

“It’s going to require a very active management, a very disciplined execution,” says Stokes. “Zlatko made it clear that he didn’t see himself as the leader through the next three to five years. He delivered that first really important change and did that successfully and this is that logical point of transition.”

A search process threw up Bansal as a candidate but it was his transformation of Cleanaway that convinced Ryan Stokes to offer him the job.

“Vik effectively led that workforce, grew that business and he is able to run industrial businesses that are complex. We think a lot of what he accomplished is applicable within Boral,” says Stokes.

Bansal agrees the challenge at Boral is no different to Cleanaway and to some extent no different to Infrabuild.

“Fundamentally it’s a good vertically integrated industrial business in a good market with a good market share. Getting that right is what should unlock the value,” he says.

“Boral has quarries and then it moves stuff no different from what Cleanaway does, it has landfills and then it moves stuff. They are all facing the same challenges of freight, fuel and energy prices.”

Ultimately Bansal says the market will have to pay for rising costs. “That is what happened in steel and I would imagine at some point that has to happen in cement and concrete as well. Prices do have to be lifted in the sector.”

During the executive search Stokes discovered that Bansal had been on the previous Boral CEO shortlist. At that time, however, it was unclear where final ownership of the company would sit.

“In some shape or form of business relationship I’ve always been in close proximity of Boral – I’ve always admired them,” says Bansal.

Earlier in the year Boral parted company with its CFO Tino La Spina. The company’s smaller footprint and a cost drive did not sit well with a $1.8m remuneration package.

Bansal will come on board with a $1.5m salary but Stokes says he will have plenty of skin in the game. “Part of that remuneration package is anchored towards a lot of equity, certainly a strong short-term and long-term incentive structure, and I feel he has the confidence in his ability to execute on that. Frankly, we have confidence in his ability as well.”

Stokes is unconcerned about any past criticism of Bansal’s leadership style at Cleanaway.

“We are very confident through our due diligence that as a leader he brings the right attributes, right focus and built a really strong culture within Cleanaway,” says Stokes.

“You don’t get to deliver those returns without a strong culture in the workforce. We are very confident that Vik is that right leader and will be a very positive change for Boral.”

Stokes plans to use Bansal’s experience in decarbonisation with Greensteel at Infrabuild and in recycling at both Infrabuild and Cleanaway to drive Boral’s green credentials.

“Zlatko put a very clear focus on a net zero plan. Boral has the leading low carbon concrete in the market. That is something we will do more to promote,” says Stokes.

He also sees Boral playing in the recycling space with construction materials. Bansal’s work at Cleanaway enabled the business to dramatically reposition itself through recycling.

“Recycling and reuse of the product is critical and construction material is perfect for that,” says Bansal.

“Boral creates the hole and what does the waste management company do? Fill that hole with material. And in between is the reuse. So there is a real opportunity here to do something.”

Bansal’s departure from Infrabuild may be a loss for GFG Alliance but Gupta has used Bansal well to effect the sort of transformation that Stokes now wants from him at Boral.

Stokes admits it would have been a big decision for Bansal. “But then this is an iconic Australian brand in need of strong leadership and the fact that it’s a public company has been a factor for him to be able to get in there and prove his ability,” he says.

As to the timing of any IPO of Infrabuild, Bansal is giving nothing away. “The call for an IPO is complex. The shareholder makes that call and rightfully so depending upon a whole host of conditions around capitalisation and the timing in the market. I have a job to do which I’ve done and will continue to do until the last day.”