Akhil Gupta wins in remarkable leverage management large companies category
Kushan Mitra July 5, 2011
The name Akhil Gupta is familiar to anyone who tracks the Indian telecom industry. He is the banker to Bharti Airtel, and an important reason why the Sunil Mittal promoted company is now jostling with global biggies for a seat at the high table of international telecommunications. What is the secret of his success? "I'm actually quite conservative," he says. "At Bharti Airtel, we did not load ourselves with a lot of debt. In fact, for years leading up to the acquisition of Zain's operations in Africa, we made sure we had cash on hand."
WATCH: Akhil Gupta shares his golden rules
When raising debt, Gupta uses a simple metric: debt to EBITDA. "A company should know just how much debt it can profitably service. In the telecom industry, which has a healthy growth forecast, three times the debt to earnings is quite good. Any more than that, and I'd be concerned about my ability to service that debt." Steering Bharti Airtel safely was a challenge when it went through periods of massive capital expansion. Today, the company has almost a quarter of India's 700-million-subscriber mobile phone market.
Gupta has a few more golden rules. One of them is to constantly evaluate one's business. Recently, Bharti exited the financial services business, by selling its stake in a joint venture with French firm AXA to the Mukesh Ambani-controlled Reliance Industries. Gupta, who was the key person in striking the deal, also played a crucial role in selling the stake. "You have to see how much you can possibly do," he says. "We did not feel we were giving it [the venture] full attention, and we told our partners as much. Businesses have to constantly look at themselves. I do not feel that happens enough nowadays."
Gupta is now removed from day-to-day activities at the Bharti Group, as Manik Jhangiani is the Group Chief Financial Officer, "Things are more relaxed for me now," he says. But he still monitors the global economic climate. "People say that Greece will collapse," he says. "But you know what? The India growth story is far from over. Sure, inflation is a concern today, but growth will continue." He jokes that when times are rough, it is easier for companies such as Bharti to raise funds. "Money flows into safe havens and companies that have established a good record," he says. And who would know that better than Gupta - after all, he established Bharti's record.