India's Business Pillars
from
January/February 2007
by Assif Shameen
Cellular Savant
Sunil Bharti Mittal, 49Chairman, Bharti Tele-Ventures
Involved in a joint venture to make corded phones with Germany’s Siemens 14 years ago, Sunil Bharti Mittal decided that the real potential lay in cellular technology. On his own, he began an aggressive pursuit of local cellular licenses and has since sewn those territories together to create India’s largest national cellular network. His company has a 24% share of the country’s 120 million cellular subscribers.
India is the hottest cellular market in the world, with the number of subscribers growing 90% annually. Bharti Tele-Ventures, which also offers fixed-line telecom and broadband services, has seen its stock price surge 27-fold since its IPO in February 2002 (from 20 rupees a share to 550 rupees—about $12). Mittal is now worth more than $7 billion.
Unlike most Indian tycoons, who come from families with business backgrounds, Mittal is from a political dynasty in the northern Punjab state bordering Pakistan; his father, Sat Paul Mittal, was a member of India’s parliament. Sunil, the second son, graduated from Punjab University with an arts degree, studied at Harvard Business School, and thought he might dabble in some small business before joining his father in politics. With a $500 stake from their families, he and a friend started a small bicycle-parts firm, but competitors blew them out of business. Mittal next bought licenses to import goods, including portable generators, timber, and eventually corded-phone parts, which led to his partnership with Siemens.
One of his earliest backers in cellular phones was the New York City-based private equity firm Warburg Pincus. It invested nearly $300 million in Bharti between 1999 and 2001, and has since mostly cashed out with profits of $1.6 billion. Emerging-markets guru Mark Mobius, who runs a $30 billion portfolio of emerging-markets funds, says, “Just about anyone who wants to invest
in India needs to have a slice of Bharti, because it’s a great play on India’s rising-consumption story.”
Though he has been called the Craig McCaw of India, Mittal’s corporate hero isn’t the U.S. telecommunications pioneer but Sam Walton. So it was fitting that in November Mittal chose Wal-Mart over other retailers for a joint venture with his Bharti Enterprises to build a chain of retail stores.
His parents have pushed him to put more of his money into charitable trusts; he donates millions of dollars to rural schools and scholarship funds. But when the government began cajoling big Indian businesses to be more socially responsible by hiring additional people, Mittal hit back, saying he wasn’t about to wreck his empire by doling out needless jobs.
The combative response was unusual for a man who has been described as “seldom ruffled.” He says he practices yoga “to help achieve a sense of detachment and peace,” and he lives quietly in Delhi with his wife, daughter, and two sons. His regret, he says, is that he doesn’t spend enough time with his family. “But that,” he adds, “is the problem with first-generation entrepreneurs.”
Home-Grown Rockefeller
Ratan Tata, 69
Chairman, Tata Group
An $8.1 billion bid by India’s Tata Steel for Anglo-Dutch giant Corus Steel in October clinched parent Tata Group’s reputation as a highly acquisitive conglomerate. With interests that also include automaking, hotels, IT services, tea, and fertilizer, the group’s sales for 2006 are likely to top $28 billion—and they’ll be far higher next year when Corus’s revenues are added in. But the fame goes beyond the numbers. The Tatas are to India what Rockefellers and Fords have been to America: doyens of enterprise and philanthropy.
Nearly two-thirds of the equity of the group’s parent firm, Tata Sons Ltd., is held by philanthropic trusts, and Ratan Tata serves on many charitable boards, including the Bill & Melinda Gates Foundation’s India AIDS initiative. He is currently focused, he says, on such issues as “microfinance, small community initiatives,” and creating “awareness of things like discrimination against the girl child.”
Tata is the great-grandson of Jamsetji Nusserwanji Tata, who started the business in 1870 with a small textile firm. An architect by training, the present-day chairman has a master’s degree in structural engineering from Cornell University and studied management at Harvard. He took over the Tata Group in 1991 and brought modern management practices, corporate governance, and a new sense of urgency into what had become a stodgy family empire. Today the Tata Group is developing businesses in emerging markets such as South Africa and the Middle East, expanding its outsourcing enterprises, and building Tata Motors through the production of affordable passenger subcompacts, including a $2,200 model. Ratan Tata has overseen the aggressive acquisition spree that gave Tata Tea control of Britain’s biggest tea company, Tetley Tea, for more than $500 million in 2000. In the 18 months before the Corus Steel bid he invested $1.5 billion in foreign takeovers, including $285 million for Singapore’s NatSteel and $416 million for Thailand’s Millennium Steel.
A bachelor, Tata is one of the most respected corporate chieftains in the country; he has been called the people’s tycoon. “I’ve never had the desire to own a yacht or to flaunt wealth,” he says.
Brother Billionaire
Mukesh Ambani, 49
Chairman, Reliance Industries
The richest Indian who actually lives there—London-based Lakshmi Mittal, 56, is richer, with a net worth of $27 billion versus his $8.5 billion—Mukesh Ambani is dramatically expanding his half of the Reliance empire founded by his father, who died four years ago. Following a yearlong public feud between him and brother Anil, 47, their mother, Kokilaben, 70, brokered a compromise that divided giant Reliance Industries between them. As chairman, Mukesh, a Stanford University-trained chemical engineer, controls the petrochemical and textile businesses,
among others. Vice chairman Anil (net worth: circa $7 billion), a Wharton School M.B.A., heads telecommunications, utilities, and financial services.
While not exactly sharing the sibling differences that separated Bill and Roger Clinton or Jimmy and Billy Carter, the two brothers have lifestyles that are poles apart. Mukesh, slightly chubby and shy, is a soft-spoken technocrat who avoids the public eye, wears conservative clothes, and has frugal tastes. His wife, Nita, runs a school in Mumbai for kids from different countries and has interests in the arts. Anil, a fitness fanatic, is brash and outspoken, loves designer clothes and the limelight, owns a palatial home in Mumbai’s tony Cuffe Parade, and has been spotted jogging while his chauffeur drives behind. He is married to Tina Munim, a former Bollywood actress.
Their father, the son of an Indian schoolteacher, migrated to the Middle East, worked as a gas-station attendant in Yemen, among other jobs, and saved his money. Returning to India, he opened a small synthetic-yarn firm in 1962, growing it over the years into a multifaceted enterprise including units for polyester and petrochemical manufacturing, oil exploration, and oil refining. The Reliance groups now run by his sons have combined annual sales of more than $30 billion.
Mukesh Ambani is building the world’s biggest oil refinery near Mumbai, with planned capacity of 1.35 million barrels a day and a new port to help handle production. He is also creating two industrial special economic zones outside the city, as well as a new township that’s slated to be the largest private-sector housing development in the world. Expanding internationally, he plans to buy oil production and exploration companies in the North Sea. And in a $5 billion domestic venture, he is opening about 800 supermarkets and megastores across India, taking advantage of laws that block many other foreign retailers from entering the country.
His goal, he says, is to make his company an integrated global powerhouse, exploring for and refining oil with its own equipment and not only producing petrochemicals and textiles but also retailing its products through Reliance’s gas stations and superstores. “We want to control everything,” he recently said. “From farm to fork, from oil wells to retailing.”
