Organised retail in India
Retail is the next big battlefield and Airtel chairman Mittal is positioning himself to be the early bird to catch the worm.india Updated: Apr 03, 2006 12:01 IST
Retail is clearly the next big battlefield and Bharti Airtel chairman Sunil Mittal is positioning himself on the springboard to be the early bird to catch the worm. With large industrial groups jockeying for elbow room in the retail sector, Mittal has zeroed in on food and farm produce as his business model. With cash and carry allowed in retail, Bharti's holding company will invest 100 per cent to rig up the new entity. The project is on his table presently and, as he told Sandeep Bamzai and M Rajendran, “this flame is drawing moths. Organised retail will be the next big play and the good news is that it is scalable like telecom.” Excerpts:
Why is always there so much talk about your position in telecom. That you will exit sooner than later...
We are in the final lap of telecom. Restructuring has received a lot of traction and it has now stabilised under the single unified command of Manoj Kohli. The restructuring of the corporate office is on my table and even as it gets my attention, I am releasing time to concentrate of retail, agriculture and insurance. Already I am traveling a lot, as I focus on northern Indian towns like Jaipur, Chandigarh and their surrounding areas for both retail and agri operations. I think the model that both the Tatas and Aditya Birla Group have evolved is something that will work for us as well - several business lines under the group's umbrella.
I don't see SingTel or Vodafone increasing their stake. Look at our positioning, we have an Asian powerhouse and a global behemoth, this gives us the benefit of both the worlds.
Airtel is now a household name. All the international forays will be done outside Bharti Airtel. When these guys took a position, they knew that this company is not for sale. At the same time, we are creating value for them, I don't see either one of them exiting.
It appears that you want to be a serial entrepreneur...
In many ways, the execution of tele com is behind me, now the new areas fascinate me. At the same time, I want to reiterate that we are not exiting from the telecom business at any stage. I like to sit down personally and look at the next levels of competence. That’s the only way to capture the feel of the organisation.
It also means that we can release more energy for other business. In the telecom space, what is on the anvil, domestically it is pretty much covered, isn’t it?
We are looking at small and medium sized telecom companies in emerging markets in Africa and, hopefully, this financial year we should grab some international ventures. One licence that we will get soon is for Jersey. It will purely be a Bharti Enterprise venture, led by us. Going in for acquisitions with partners slows you down. There is nothing on the table immediately, but we are watching a couple of things closely.
But do you plan to offload additional equity in BTVL?
We have raised a large amount of cash through the Vodafone deal and there is no need to divest more stake. Control in telecom will not be compro mised. It is reflected in the 46 per cent control we have in telecom through our holding company.
Fieldfresh is your farm produce venture and you have indicated that retail will take up your time, so how will it work out?
Agriculture and retail will be driven by us. Even as one awaits regulatory clearances, the development of contract farming will be vital. Our partners in insurance - Axa - have the necessary domain knowledge, so that it not an issue. The agri-retail operation for starters will have to be a northern Indian play. Food, grocery and farm produce are all connected in a manner. The model is a mini-Tesco. At the same time, I must add that everyone has jumped the gun. We are still in the planning stage, it will take three to four months. Yes, we are in an exploratory dialogue with Carrefour, Wal-Mart and Tesco. To me, it seems that the cash and carry model will be the way forward. Our point of presence will be the neighbourhood markets. Bharti will put in 100 per cent and the business will be capital intensive. As it grows it will be pan Indian.
Would it be on lines of Tesco or the Marks and Spencer’s food store model? Will Tesco be your partner for the retail venture?
Not exactly, because Tesco sells many more things like TV, bicycle, computers. Our thrust will be only food and grocery. So it will be a mini Tesco model. With Tesco we have been discussing to sell our fresh produce.
You sound very committed to this new business line?
I am extremely passionate about both agri and retail. It is the next big opportunity, believe me. Many summers ago, it was telecom and, fortunately, I was there. Now the train is back at the station and I once again have an opportunity to hop onto it. Look around you, organised retail will change the face of this country. All the big business houses are venturing into retail.
How are you dividing your time?
Currently, 50 per cent of my time is on telecom and 30 per cent is on travelling, speaking at various fora, participation in seminars and 20 per cent on the new businesses. Going forward, it could be 25 per cent in telecom and 75 per cent on other businesses.