Nalin Rathod talks about Bakrie & Brothers' growth

Bakrie & Brothers president director Nalin Rathod has the strength and flexibility to tackle the complexities of Indonesia's corporate landscape.

Nalin Rathod seems to have it all: variously described as a risk-taking entrepreneur, a problem-solver, a rainmaker and a clear-thinking manager who commands the loyalty of his staff.

Rathod, who arrived in Jakarta with his family from Chennai in 1980, is currently president director of Bakrie & Brothers, one of the largest conglomerates in Indonesia, with big interests in the coal mining, telecommunications and infrastructure sectors.

He joined the Bakrie group in 1987 when the market capitalisation was $35 million and a decade later, it had risen to $1.4 billion. He was then managing director and chief financial officer of the group. At its peak in mid-2008, the group's market cap reached almost $18 billion before the subprime crisis hit the market. Its current market cap is around $3 billion.

Colleagues said he is "very accessible, running his businesses like an extension of his family". He and his wife Bharati have three grown-up children and his work as president of Jakarta's India Club means he has acquired a local extended family too.

Rathod took to responsibility when he was young. Just out of university, he went to work at his uncle's loss-making auto-parts factory in Chennai and was immediately put in charge, managing a workforce of 140. The first thing he did was hire five people for 15 days to clean the filthy factory; meanwhile he made a detailed study of the business and its short-comings. Within a year, after introducing new technologies and shortening the supply-chain, he had made the company profitable, and with only a third of the workforce.

Despite his success, family rivalries meant Rathod had to move on. He spent a short time at Ashok Leyland, as part of its corporate planning group in Chennai, before planting his factory-soiled footprints across a lush green carpet for a successful interview at ICICI Bank. Here he found himself responding to his questioners in four different languages: English, Hindi, Tamil and his native Gujarati. And of course, he has since acquired fluency in a fifth tongue, Bahasa.

Rathod held various positions with ICICI as a senior officer looking after loan portfolios. He described part of his role there as a "company doctor", flying around India to meet business managers before helping them restructure their operations and refinance their debts.

Perhaps Rathod's strongest quality is his ability to multi-task, yet concentrate his full attention on the issue he is dealing with at the time. Others have said his greatest strength is his history of closing deals regardless of their complexity. Indeed this has earned him respect even from his critics. The 59-year old Rathod is a teetotaller, and maybe that also helps him manage his time so effectively. One thing is clear: he has been involved in some of the most prominent deals in Indonesia during the past two decades.

Rathod has been prominent in several complex transactions for the group that have since become key components of its portfolio. His counterparties have often been powerful multinationals such as BP, Rio Tinto, BHP Billiton and Freeport McMoren.

Having helped arrange an initial purchase of 20% of Arutmin Indonesia in 1989 from BHP Billiton, Rathod then organised Bakrie's acquisition of the remaining 80% 12 years later after "intense negotiations" with BHP.

When Rathod arranged the acquisition of Kaltim Prima Coal in 2003 from BP and Rio Tinto, critics complained about the complexity of the highly structured leveraged buyout financing and also that the group knew nothing about coal mining. Yet he and his team have increased productivity and reduced the number of injuries at the mine, which has become the crown jewel of Bumi Resources; and the conversion of the financing into a securitised international bond deal two years later earned several awards.

But it was between 1997 and 2002 that Rathod made his name. He was deeply involved in the the group's major reorganisation in the wake of the Asian financial crisis.

Rathod successfully restructured debts of more than $2 billion from more than 200 banks and investors worldwide. Bakrie was one of the first Indonesian groups to completely restructure its debt.

Rathod is nothing if not confident. He told FinanceAsia how he fired the international bankers brought in to advise on the restructuring, having finally lost his patience with the junior bankers fresh out of business school who had been dumped on him. The last straw was when one of them patronisingly - and ignorantly - tried to explain accounting principles to him. He quickly decided he and a small, experienced in-house team with industry knowledge could do a lot better.

They completed the deal in 2001, and then saw off creditors who insisted that Bakrie relinquished control of 10 of its businesses. Rathod and Aburizal Bakrie, the group's paterfamilias, simply called their bluff. Fine, they said, but who else can manage these companies and repay the debt. So they reached an agreement whereby ownership would revert back to Bakrie when certain thresholds were reached, and by 2005 Bakrie had recovered a 32% holding in the group.

Since then, Nalin has been prominent as part of Bakrie chairman Nirwan Bakrie's team in streamlining the group business and ultimately creating an investment holding company.

But during the past six months, Rathod and Bakrie have faced complaints that the group has taken money from Bumi and other subsidiaries, and that it has paid too much for acquisitions of coal mining companies that have been closely linked to the Bakrie family's private interests. Rathod rejected all these charges, and quickly launched into a detailed - and typically combative - analysis of recent purchases, especially cost-comparisons with mining acquisitions by rival companies.

Much of his time now is spent travelling the globe, reassuring investors and convincing media sceptics. Public relations is yet one more skill he has had to acquire - and who's to say he won't master that too.

This story first appeared in the June issue of FinanceAsia.

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