Dialling R for retail

Newsmaker: Sunil Mittal

It was the late-eighties and insurgency in Punjab was at its peak. Gun-toting security officers accompanied us in a Contessa across vast wheat fields to a modest factory on the outskirts of Ludhiana.

There, an entrepreneur showed off the new pushbutton telephones he was manufacturing (with technology from Siemens) for state-owned telephone operator MTNL.

Since then, Sunil Mittal has come a long way as the country's undisputed telecom czar, running a Rs 13,000 crore empire built over a decade.

But this week Mittal added another feather to his cap when he tied the knot with US retail giant Wal-Mart to gallop his way into the retailing business. The announcement came a few days after his talks with giant retailer Tesco had failed to make headway.

Under the deal Bharti will run the front-end of the business, which includes the retail stores since FDI is not permitted in multi-brand outlets. At the back-end, the two partners will set up a joint venture to undertake a cash and carry business (like Metro in Bangalore) and also run the logistics required for the venture.

The 49-year-old Ludhiana lad started off selling bicycle parts and, later, hawking imported portable generators in an autorickshaw. When the government decided to ban the import of generators, Mittal had no choice but to close shop. It was then he forayed into pushbutton phones and the world of telecom.

But it was the opening of the telecom services sector that dramatically changed his fortunes. He bid for and won the Delhi mobile license. From then on there has been no looking back, even though he changed partners from Vivendi to Singapore Telecom to Vodafone. Airtel is now a household name with a pan-Indian network of 30 million subscribers.

Mittal wants to repeat the same magic in retail. Over informal chats, he has repeated that telecom may not always be the biggest pie in his empire.

Also, he intends to step down as executive chairman of his telecom empire when he touches 50. He has already restructured his telecom empire to be run by independent CEOs and professionals.

Those who know him say his interest in retailing stems from his wish to get into agriculture. Others say he has political ambitions, and that retail and agriculture are his way of building a large vote bank. Mittal, in the past, has repeatedly said he is neither averse to nor enamoured of politics.

Whatever the case, he has treaded cautiously. He tied up with US investors, the Rothschilds, to get into food processing and delivery of fresh farm produce in order to learn the ropes of back-end retailing. And he already has 6,000 acres under cultivation with farmers providing fruits and vegetables for export as well as the domestic market.

Not that Mittal has the Midas touch. His tie-up with Changi airport (for the privatisation of Delhi airport) came to naught when the Singapore airport services company walked out of the deal at the last minute. But with Wal-Mart, he might have struck gold.