Bharti bets big on new biz, eyes USD10 b revenue

Sanjay Anand / TNN / Mar 26, 2006, 23:56 IST

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In 2006-07, focus will be on Insurance, Horticulture, chain of Grocery, Vegetable stores.

Bharti bets big on new biz, eyes USD10 b revenue

NEW DELHI: Bharti Enterprises might soon become a case-study of how a company that grows fast has no choice but to grow faster still and manage the growth well.
Flush with funds and manpower resources that were built up during the rapid growth of telecom business over the past 10 years, Bharti will see take-off of new businesses starting new fiscal.
Over the next 12 months or so, Bharti will see revenues flowing in from insurance (JV with AXA), horticulture (FieldFresh, JV with Rothschild, UK) and a nation-wide chain of grocery and vegetable stores, the details of which are still being finalised.
Of these, Bharti is betting big on retail, which could possibly be the next billion dollar business after telecom. And, it could happen within five years, according to Bharti CMD Sunil Mittal.

In fact, Bharti Enterprises is looking at growing to be a $10 billion dollar group within 5-6 years, with its flagship telecom business contributing under 75% of that turnover, said Mittal in a wide-ranging interview with ToI.
For now, telecom services, under the listed BTVL (Bharti Tele-Ventures Ltd.), make up for almost all of about $2.75 billion the group is expected to close at this fiscal.
In the next few years, grocery retail-chain, fruits and vegetable exports and insurance are expected to pitch in the rest of about 25%.

Over the past 10 years, as BTVL has rapidly grown to become a nation-wide, integrated telecom player offering cellular, landline, STD, ISD and Vsat services, Bharti has accumulated financial and manpower resources that need to be deployed beyond telecom, says Mittal.
After the company failed to enter airports business it was so keen on, Bharti has turned attention to even more capital-intensive retail business. This will be the latest news for Bharti. Before that the insurance business is expected to take-off in June.
"We have set up the office in Mumbai and are hiring frantically. We have hired a CEO from the banking sector, an Indian settled abroad. Can't give the name just now. But we're waiting for the licence," says Mittal.
As for Agri-business, FieldFresh is shipping consignments already to Europe through Tesco. "By next March, I expect FieldFresh to be Rs 100-crore business and about $100 million within 4-5 years.
From there on it should be only a few years for FieldFresh to bring in revenues of a billion or so," says Mittal.
We have tied farming contracts that cover about 3,000 acres of cultivation. Soon we will add 2,000 acres more."
FieldFresh is already in talks with retail chains like Tesco and Wal Mart to become a key supplier of fruits and vegetables in Europe and US.
But it is the retail business in India that Mittal is betting big on. Still in nascent stages, Bharti plans to invest heavily in setting up a nation-wide chain of vegetables and grocery stores.
"That should be Bharti's billion dollar business within five years of operations. We are going through all the planning and within a few months, the first few stores should be set up," says Mittal.
Produce of FieldFresh will be for exports only and not constitute more than 2-3% as a supplier to Bharti's retail stores. For that local suppliers will be tied-up with.
"We will be talking to HLL, Proctor & Gamble and so on, for also sourcing tooth-brushes, soaps and toiletries," says Mittal.
As for telecom, Mittal says that Bharti should have 25% market share, with at least 75-80 million subscribers by 2010 (out of 300 million projected subscriber base for India), with an average spend of Rs 5,000 a year.
"Give or take a year or two over that, each of our rest of businesses should be a billion plus in revenues eventually."
Interestingly, BTVL took nine years to generate the first billion in revenues for Bharti a couple of years ago. And then, talking about valuation, offloading just about 10% of it to Vodafone fetched Bharti promoters and investors $1.5 billion last year.
On whether he will sell off some businesses once the valuations grow big, Mittal says, "We don't sell businesses, we build them, unless I decided to walk away from some, like the healthcare business.
But, if I need a billion to fund the retail business, for example, I will offload some stake."

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