Chairman of the Bharti Group, Sunil Mittal TalkAsia Interview
Airdate: February 19th, 2005
SB: Satinder Bindra
SM: Sunil Mittal
BLOCK A
SB: This week on TalkAsia a man who went from selling bicycle parts to becoming India's 'King of Telecom'. This is TalkAsia.
Welcome to a special edition of TalkAsia from India. I'm Satinder Bindra standing in for Lorraine Hahn. Our guest this week is Sunil Bharti Mittal, the chairman of the Bharti Group.
He's had to navigate through a sea of bureaucracy, work under unfair policies, and compete against the toughest veterans with deep pockets. But even with all that, Mittal has established India's largest and most respected private telecom's group, worth more than 6 billion dollars. He's largely credited for helping lower what used to be exorbitant rates, and bringing mobile phones to the masses. And as if that's not enough he's reversing the catchword of the year- outsourcing. Telephone groups are not outsourcing to the Bharti group, in fact, it's the other way around. I recently caught up with the telecom king at his headquarters in New Delhi. He shares with me what he thinks has been his biggest competitive strength.
SM: Well, I would say that speed has been our big weapon. And whenever we are caught between speed and detailed analysis, we have chosen speed. And that has been to our advantage.
SB: A short while ago, you took large sections of your business and outsourced it to IBM and to Ericsson. Tell us why you did that, and were you the first? What was the rationale behind that and how was it welcomed as well -- in your company?
SM: Well it's been a tough call. What we have done is changing activity, nobody in the world has attempted to do what we have done. If you look at the IT piece, right from the laptop on my desk to the most complex piece of IT, it has all in one fell swoop been given to IBM. Similarly, all of the networks...(SB: So they will manage all of your information technology needs? SM: Everything SB: What's the deal worth with them? SM: About 750 millions dollars, is the current estimate for the next ten years). And then we have given all our networks out to Ericsson, Nokia and Siemens, and that will be another billion dollars in the few years. So this has been a very revolutionary step, the main reason for this is the growth. We have to manage growth, we will be a 25 million-customer company in two years. There are only six companies in the world which have 25 million customers or more, and when I compare myself with those companies we are rather modest and tiny in size and resources. The one option was hire 12 or 15,000 new people in the next 24 months -- train them and make them think our way. The other was outsourcing and giving everything out and concentrate on our core competence that is to serve the customer.
SB: And this was the first time anyone in India has done something like this. Because all that one hears of is international companies outsourcing to India, you have actually reversed that trend?
SM: This is the first time in the world anybody has done IT and natural outsourcing at the level we have done. But yes, it was a reversal of a trend where an Indian company was outsourcing to an American company for IT services.
SB: Now as you've grown over the past 3 to 4 years, there's been a lot of global interest in your company. You have Singapore-based telecom company that owns a lot of shares, you also have Warburg Pincus -- which is US based. They own, I believe, 46% of your company. How have you been able to attract so much international attention?
SM: Well this is the fundamental foundation of a company - to fly on the wings of very large companies. When we were a modest, tiny company and we had a big dream there was no option but to rely with the best in the world, and I believe it is hard for two Indian companies to get along well, so the choice is (SB: Why do you say that?) SM: It's difficult, when you have ambitions which clash in the particular industry or the country, it's hard to keep the...going. And I would say history is a clear witness to many of the problems that have erupted, when two partners from the same industry or same country have come together. We have given the country benefit to foreign partners, they have come and partaken in the growth and the positive energy this country gives, they have no ambition to upstage us and come and replace us, we don't have any ambitions in their country so it's very complimentary.
SB: Does that make you a company that's actively searching for global finds, or are you a global company or do you just want to be globally respected company -- where do you stand?
SM: Well, on the ground our operations are in India. We believe we are in a country where the growth is still to be captured, so we will remain reasonably focused in this country. We rely with the best in the world, whether it's technology, whether it's service providers, strategic partners -- we seek global capital, we'll go to the markets to get more money, both equity and debt. We are planning to list ourselves in the American markets. But our vision is to be globally admired, for providing telecom services and delighting our customers.
SB: Up next on Talkasia. Find out how a little bit of luck and a lot of charm helped Sunil Mittal climb up the ladder of success.
BLOCK B
SB: Welcome back to this special edition of TalkAsia from India. The chairman of the Bharti Group, Sunil Mittal comes from the town of Ludhiana in North India. Some expected he'd follow in his father's footsteps and become a Member of Parliament. But Mittal had his own ideas, early on.
SM: Well, 1976 I was all of 18 and when I stepped into the world of business, the capital I had in my hand was 20,000 rupees (SB: Which is about 500 dollars). Today, must have been 3,000 dollars then -- not a measly sum. And I started manufacturing bicycle parts, I come from a city called Ludhiana where almost everybody is self-employed and either you make bicycle parts or bicycles, or hosiery parts or hosiery goods. And so the influence is very topical, and anyone coming out of college would go and look at these businesses. Clearly it was a business which had limited ambition around it, and I did realize very early on that one had to move on. But those four or five years that I spent doing a variety of small scale activities in Ludhiana did I think influence my mind to delve more deeper into detail and how to bring out profitability from very low cost operations
SB: Did you feel then, of course the way you started, that you were always hurting for cash? And did that make you realize that to grow and to be successful, you needed some partners with deep pockets?
SM: Very clearly, the need of capital was always there. When you own a small business, the capital is small. But I did pick up very early signs that I had the way with to charm the lenders, or partners to come and join hands. I could convince them about my little dreams that I used to carry, and whether it was a bank manager or a partner from abroad, I could generally seek a lot of credit from them. Just to give you an example, many years later when we put up the mobile network in Delhi, the project was 100 million dollars and our sales at that point in time was 5 million dollars -- sales not profits. So it's hard to raise that sort of money, and I had a meeting with the president of Ericsson in Sweden and I told him I don't have the money to pay you for your network (SB: Right), but I will pay you when we're happy. And he said, define happiness and I said, the day the customers are happy talking on their mobile phone I'll pay you the money. And he's kind enough to accept it, and it's very unusual for a company of their size
SB: But it sort of makes me go back a few years, you said you always charmed people into giving you credit. There's a story that you used to carry a table tennis bat when you would go to see your bank manager -- let him beat you in a few games and walk away with a ton of cash, correct? (Sunil laughs)
SM: Not a ton of cash, tiny amounts. (SB: Every little bit matters!) Thousand, few thousand dollars... Yes, he was very fond of table tennis and I used to be a ranked player in my university days. And I did realize that something that he likes was to play table tennis, and usually I would issue checks to the suppliers, with no money in the bank, but credibility was very important and it had to appeal to the manager's senses and that used to get translated in a game of table tennis.
SB: What lessons from your sporting days have you applied to business?
SM: One is perseverance, in sports you have to keep on, because there is one area where you are bound to lose at some point in time. Whether you do it in the pre-quarters, semis, or finals -- you will end up losing one day and you start sort of living with shocks in your life, and you persevere to do better, you excel. I think secondly it's training, you have to keep on training yourself and retraining yourself to do better next time. More importantly the competition is moving all the time, the other players are getting better, smarter, younger lot is coming in -- so it keeps you on your toes. But more importantly I think, what I have picked up from my sports days, is a passion, that I used to display, even with a relatively poor game playing with better players. Passion was very important and finally, inspiration leadership. Important whether in sports or now in business to provide that kind of leadership. Most of the time most companies like ours don't have enough capital, even if you have good partners they don't easily write a check. You need to drive the organization with very limited cash, and when you're fighting very large companies the only thing that can go, and keep them going, is inspirational leadership.
SB: You have thousands of employees, how do you connect with them face-to-face? Do you do a lot of traveling, or do you ask them to come in and see you?
SM: It's a mix of both and when you're a small company I knew everybody's face, everybody's name. Today, of course, we have over 8,000 people on board and another 8,000 who are employed for the company from outside agencies, it's hard now to meet everybody on a personal basis. But I do town hall meetings, I travel extensively across the country, wherever I go we have an employee communication forum where 2 to 5 to 800 people assemble and it's no holds barred. It's a very transparent address to them, we talk about our weaknesses our strengths, and then there are some very hard questions which are asked from the floor, and they are honestly answered. You link everybody onto the vision that we have. I still recall when things were going very bad. Two years back, not many people were giving us a chance. Most of the time the only question used to be, 'When will they collapse?" because the competition was really very big and the regulation was very unfair. And the hand that had been dealt to us, a poor hand, we had to fight this battle.
SB: Was that your hardest moment?
SM: Well I never thought we were going under, but I would say a lot of our shareholders, some of our colleagues, peers, started feeling the heat. I would say the last 2 years have been the most difficult period of my life until now, but paradoxically thus far the most successful as well. And I believe this is a matter of case studies by various business schools, already I trust are already being shown into this, how a company in the most difficult, trying, challenging time also became very successful.
SB: You know, as a sportsman you learn to lose and you learn to lose graciously. When you lose in business the deal goes sour, you don't get what you want, how do you cope?
SM: The same way. We take it in our stride and move on. We've lost many battles, especially in the regulatory front almost everything went wrong in the last 2 years. It was generally felt that it was not being fair to us, but we had to play it. We lost in the marketplace in some areas-we took it in our stride; we went onto the ground for six or nine months when this storm was blowing over us. We knew we could not stand up to it and fight it, so we were nice enough to go on the ground and recognize it. So we are in that sense, have the humility to see the defeat in the face, and challenge it in our own way. We stood up after 6 or 8 months and fought back and fought back valiantly.
SB: People who work with you say you are so intensely driven, you're so focused, you're such a workaholic, you never have time to sit back, relax and sometimes smell the flowers
SM: Well, it's getting better first of all I would say, but yes you cannot build something out of the ordinary by not being intense. But there was never a stress; I wouldn't say we were stressed out hardworking. For me, Monday morning is the most delightful time in my life; I wait for a Monday morning to get behind my desk. And I enjoy my work. I'm a very strong believer that if you have the luxury to do what you like, as opposed to liking what you do, and I've been very fortunate that I have liked and loved every moment of what I have done to my mind that equals a success.
SB: Just ahead on TalkAsia, what's next for India's telecom titan.
BLOCK C
SB: Welcome back to TalkAsia, and our ongoing conversation with India's telecom giant and the chairman of the Bharti Group, Sunil Mittal. At 47 Mittal is beginning to dip his toes into other ventures to keep the adrenaline rush going, but he hasn't taken his eyes off the telecom ball just yet. He faces intense competition from Indian business heavyweights like the Tatas and the Reliance Group. He shares with us what that's been like and his vision for the future.
SM: It was tough, I think we have now left it behind us. There's a period in time when you are joining the big boy's club, there's a lot of resistance. Once you are there you become a part of them, I think this ship has stabilized now. The intensity of competition in the market place will forever be there, this is a very very competitive market there's bloodletting in the marketplace -- that will remain. But the company today is over 6 billion dollars in market cap, it's well funded, it will have sales coming close to 2 billion dollars, it has sales higher than info sales Wipro, it has got more cash profits than Wipro (SB: These are the of course, the outsourcing giants that everybody outside of India knows so well? SM: Well, they are well-respected companies now). So I think the company is now within its own reason, strong enough to fight these battles. So my belief is that we will be able to carve our own strong position in the marketplace without any problem
SB: You used a metaphor, that this ship has stabilized, but when things get stable people like you get restless -- am I making a correct assessment?
SM: Yes, but this has been on schedule. The good news is I had said many years back and on record that there will be a period in time I had said 50 years of age-and I'm 47 now. So couple more years, leading the same ship, getting into more stable cores adding some more momentum and weight on it, I think I'll be ready to move on.
SB: But you're already diversifying into other businesses, you've signed a deal with the Rothschild family in Europe and you want to export food from India. Make India sort of a centre, a production centre, for food and fruit. How would you go from telecommunication and make this huge leap into you know supplying food to the rest of the world?
SM: Well, it's pretty much like bicycle parts to telecom, because it's completely disconnected. And today, at least you have the where with all, the management strength, the brand to do new things. I've been looking at an opportunity outside telecom, which we wanted to kick start now, which in 2 or 3 years time is ready to be taken to the next level, and one of the areas where India has tremendous strength, is in the area of agriculture, and it's least exploited. And I would like to see 10 jumbo loads of fresh vegetables and fruits going out of India. And when you go into London into Tesco shelf, you can pick up (SB: These are the supermarket chains? SM: The big chains there), and pick up a lettuce and say 'Made in India', that'll be a moment of great triumph.
SB: It's been said that when you do business, you want to have an impact on people. Is this what you mean by impact on people, because by doing so you could be helping Indian farmers, and then people across the world get to get a bite of India, literally, sort of thing?
SM: Well, absolutely if you really look at it, most of the rural area is engaged in cash crops, wheat, rice. The income that they get is 5 or 6,000 rupees an acre in their hands (SB: 5 or 6,000 rupees meaning about 125 dollars? SM: 100, 125 dollars an acre, for a cropping patent), you move this vegetables you're talking about probably 4,5 maybe even 10 times more. And I was in Punjab the day before yesterday (SB: In northern India? SM: Northern India), went into the fields, met the farmers, it was like a big carnival when you land in a chopper and you had farmers coming to you, they were showing you the produce, I felt very very happy that we could make a very big impact.
SB: Now there's an emotional sort of factor here, too because you come from the northern Indian state of Punjab, you grew up there. Are you sort of giving back, is that the philosophy? Or is this just sort of you want to keep this completely to business, you want to make money?
SM: This is, this is business. I would say that every project that we have put into place has had a financial gain at the end of it. But if you look at it, you could do many other things to make money. But these are the projects which are very difficult, very challenging and therefore they will also make a lot of money.
SB: You are also planning to build and modernize airports in India. Again, why would you choose something like that?
SM: You said it yourself, high impact, big statement for the Indian government to the world, and more importantly, impacting 40 million passengers-we call them customers-who will come in and out of the airport. If you go to the airport today, it's 1950s vintage, it's horribly bad, very poor planning, it doesn't cope with the capacity. India is a big tourist destination now. India's becoming a big business destination-where are the airports? We are too far behind. Again we have chosen Changi airports, 13th year running, best airports in the world. If you go to Singapore you will see the magic of Changi, they are our partners. We hope we'll get the honor to build this airport. If not, whoever will be a good airport will be good for India.
SB: You've been very successful, but along the way what has been your biggest regret?
SM: There have been no regrets, you will have your problem areas and you will have your triumphs. And on balance, if 8 times you are doing things right, and 2 times you are doing it wrong, that is fine because you cannot score a perfect 10 in real life, it's not possible. I don't remember that I can recall any regret that I've had, things have been very good.
SB: If there's one sort of wish that you had, even outside of the business sphere, what would that be?
SM: The only thing that I would always wish and do wish, is that I wish my father was alive to see what we have created. As a politician he had a dream that my children could perhaps one day, establish a business first time from a political stable which could be respected and admired. Politics is generally considered as an area where most of the people take their last refuge. But the fact is, he had a vision, he kept us away from politics and he wanted to see a large empire, or a respected company built up. He went away too soon in 1990, so that is the only thing I would have wished that he could have been here to see.
SB: Sunil Mittal, the chairman of the Bharti Group. A man who didn't let his inexperience stand in the way of his dreams. And that's TalkAsia for this week. I'm Satinder Bindra standing in for Lorraine Hahn. Thank you very much for joining us for this special edition of TalkAsia from India.
