Indian mobile phone king signs deal with Wal-Mart
NEW DELHI: Fresh from changing the way India communicates, Sunil Bharti Mittal now wants to change the way it shops. Along the way, he hopes to change the way the rest of the world eats.
In August, Mittal, the 49-year-old chairman of Bharti Enterprises, one of Indias biggest conglomerates, signed a deal to bring Wal-Mart here. Though neither Wal-Mart nor Mittal has disclosed the financial details of the joint venture, it pledges to set up Indias first modern wholesale distribution system, bringing goods from farm and factory to retailers.
If he succeeds, Mittal will have built a critical link in Indias dysfunctional infrastructure, in which an estimated 25 percent of the produce grown by Indian farmers rots before it can be sold.
“The cold chain, the trucking, the storage, will all ensure that the whole nation gains,” he said recently in an interview. India “can become a food supplier to the rest of the world.”
Mittal admitted, “I like to express myself through large, transformational projects.”
The line may sound arrogant, but thanks to his success in telecommunications, Mittal has become a new figurehead of Indian capitalism. He leads the welcomes for visiting politicians and businessmen, encouraging them to invest in India. And this week, he has taken his show on the road, spearheading a business delegation to the United States that is ostensibly celebrating 60 years of Indian independence, but also selling India as a destination for foreign businesses and capital.
Mittals ambitious plans with Wal-Mart are part of what he calls a constant search for the “next big fix.”
The first was building Bharti Airtel, basically from scratch, into a more than $40 billion nationwide telecom company. Together, the “telecom industry and Sunil have demonstrated the benefits of the government getting out of the way,” said Scott Bayman, the former chief executive of GE in India.
As the son of a respected but middle-income politician in Punjab, Mittal lacked the generations of family money that helped start the careers of many powerful Indian businessmen. (He is no relation to Lakshmi Mittal, the head of the steel giant Arcelor Mittal).
After graduating from Punjab University, he started a bicycle parts company with a small amount of cash from his father, then delved into various businesses before settling on telecommunications.
Kamal Nath, Indias minister for commerce and industry, remembers Mittals first telecom project, selling a device that brought push-button dialing to India for the first time. “He was so excited when he was selling those,” Nath reminisced in a recent interview.
Bharti Airtel got its big boost when the company won a license for cellular service in the New Delhi area in the mid-1990s, though few knew it at the time.
“People were not expecting that the cellular license would bring that kind of profitability,” said Hitesh Kuvelkar, associate director of research for First Global Securities in Mumbai. At the time, most analysts predicted cellphone penetration in India would not top 5 percent. Today, it is about 19 percent.
Initially, Bharti shared Delhi with Essar Group, the Indian conglomerate, but as the steel industry went through a bad patch, Essar took their focus off the telecom industry and Bharti grew quickly. “Delhi became their cash cow,” said Kuvelkar.
Detractors have hinted that Mittals fathers political connections won him favors that helped the business grow, a charge Mittal denies.
The company had the equivalent of $5 million in profits in 1992, the year his father died, Mittal said. For the year ended March 31, Bharti Airtels profits were 42.6 billion rupees, or $1.1 billion.
Mittal said that in the last 15 to 20 years, Indias corporate sector has operated “completely along the lines of what you see in the United States.”
But if Bharti Enterprises encapsulates Indias new market-economy consensus, it also embodies some of the vestiges that continue to dominate the top ranks of business here. Just 39 percent of Bharti Airtel, with a market capitalization of $40 billion, is publicly traded. Forty-six percent of the company is owned by Bharti Telecom, which in turn is owned by Bharti Enterprises, a privately held group controlled entirely by the Mittal family. Bharti Enterprises does not disclose financial details of its deals.
Still, critics of Mittal and his business plans are few, and they are generally loath to speak about him publicly. In a rare dressing-down, Rajeev Chandrasekhar, the former chief of a rival telecom, complained this month in The Times of India that Mittal has taken more credit than he should for Indias telecom revolution, citing a recent interview. Mittal responded in an open letter, saying he had been misquoted and inviting Chandrasekhar out for a drink.
