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I had panicked well before I met him. Rahul Bhatia, the 46-year-old CEO of Interglobe and the chairman of Indigo airlines, is known for his reticence, mistrust of the media and general economy with words. It would be the shortest Lunch with BS. We'd meet, eat and part ways — will there be any conversation worth mentioning? Rather, the more relevant question was: would there be any conversation at all, writes Anjuli Bhargava. As I sit worrying about how I would explain this to my editor, I hear a clearing of the throat and look up to see a hesitant smile. He's also beginning to wonder. Does Lunch with BS mean just lunch with BS ? We are at Tonino's, the charming Italian restaurant on Mehrauli-Gurgaon road. Bhatia is a regular and quite comfortable with his surroundings. He suggests we get the ordering out of the way and then begin (there's hope). He has a rocket salad followed by a soup. I have a soup followed by a rocket salad. | |||
Bhatia presides over an empire of just over Rs 4,000 crore (with net profits of just under Rs 200 crore annually) with close to 4,500-5,000 employees, without making a song and dance about it. He's hardly in the press, has never raised any money from the market and yet he runs — from what I understand — a tight, efficient and rapidly growing ship. Where is his magic wand?
He begins from the very beginning. His father, who had "come off the streets", founded a travel business where they were generalised sales agents (GSAs) for various foreign airlines in India way back in the mid-1960s with nine other friends with a princely sum of Rs 1 lakh (this was contributed by all the other nine individuals). Bhatia came back after studying in Canada with a project in hand and a reluctance to join his father's business due to its multi-owner structure.
In 1988, many of the older generation passed away and as the new generation began to come in, Bhatia says they began to see the first signs of everyone "wanting to do their own thing". He toyed for a while with the idea of returning to the US and take up teaching.
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Then, in 1991 — he remembers the exact date, September 30 — Bhatia and his father discovered that some of the partners had bought up equity in the company without their knowledge and owned a majority in it. They were politely asked to exit the business and were initially shattered at the deception.
"I was worried for my father. He had been ill in 1988 and then he'd had what he had created and nurtured with tenderness taken away from him," Bhatia recalls. His project hadn't taken off either, but this was enough to convince him that he needed to plunge into the business full-steam. That's when InterGlobe (late 1991) as we know it today came into being.
Things were very tough in the beginning, but "I think somewhere in all that, the power of relationships was underestimated," says Bhatia. All the airlines whose business had been with the old company moved — without exception — to InterGlobe. Since then, there's been no looking back.
The GSA business, one of his cash cows, runs on auto-pilot, as does his franchisee arrangement with Galileo. Future growth lies in InterGlobe hotels, Indigo airlines and InterGlobe Technologies, the three businesses where he is investing constantly. That's where, he thinks, he'll get "the best bang for the buck".
He's never tapped the market as "he never had the need for it," but says that may change in the future with his hotel venture. "In India, we have either the Indian version of five-star properties or really shaggy guest houses. The burgeoning middle class is crying for a quality offering which reflects value for money," says Bhatia. Over time, he sees himself cross-selling InterGlobe hotels with Indigo airlines, as the demographic audience for both is identical.
The airline is in no rush to raise money either. "The fundamentals of the aviation business are not right to go to the market. The industry is yet to mature. I'm sure the rest of the industry knows better, but before we go to the market, I'd like to be making money," he says, explaining that a stronger balance sheet will help him get full value.
Bhatia's advantage lies in his treatment of the business, purely as a mode of transportation and to make money. "I have seen this time and again. People tend to place their personal might behind their airline and it becomes a mug's game of trying to outdo the guy next door. The game never stops. People don't stop to remind themselves it's just a mode of transportation and a business. And before you know it, the caviar you serve is the best caviar in the world, the lounge you have is one of the finest in the world. In the process you don't realise the kind of costs you have added to your structure," he reasons.
I ask how he divides his time between his various businesses. He focuses more on the "macro-aspects" of it, leaving day-to-day running to his chief executives. With Indigo, for instance, he restricts his role to liaison with the ministry of aviation, leaving the running of the airline to his able CEO, Bruce Ashby, who works in tandem with Rakesh Gangwal, an almost equal partner in the venture and a friend (Gangwal is based in the US and has many years' experience with different American carriers). People, Bhatia thinks, can make or break a business.
I ask him what he thinks of the Kingfisher-Deccan merger. He's not too convinced. "I don't know really. If you look around the world, more often than not, mergers end up being zero-sum games. The benefits of consolidation tend to get mitigated by the cultural mismatch of the different entities that get merged. Having said that, Vijay is a smart guy," says Bhatia. From the industry standpoint, he's happy with the merger. "It reduces one player in the market, so consolidation is always a welcome thing," he adds.
Does his Rs 4,000 crore obsession give him time for any other interests ? "If you ask my wife, she'll tell you he does nothing else," he laughs, defending himself with the claim of being an avid golfer. He's passionate about food (that explains ‘China Club', his restaurant in Gurgaon). "I did China Club for fun," he says. Launching restaurants for fun?
A friend of mine, who works closely with Bhatia at his advertising agency, says he's fanatical about detail and quality. "It's not unusual to get a call from Rahul in the middle of the night and hold a discussion on whether the colour of the napkins they have chosen is right or should it be just a trifle darker. If everyone in India was as maniacal about detail as Bhatia, he says, India wouldn't be India; it'd be Singapore. Bhatia agrees that he's a tough customer but says that without quality, there is no "hope in hell".
As we finish a shared tiramisu, Bhatia's phone, which has been remarkably well-behaved during the lunch, begins to ring. He is, however, in no hurry to leave. A coffee is ordered.