NEW DELHI: It was the late 60s and Andhra Pradesh, like Orissa, West Bengal and Kerala, was grappling with Maoist forces, which is now known as the Naxalite movement. A young lad from its heartland — Rajam village in Srikakulam district — who belonged to a small trader community set out to discover the world. Thirty years later, this man is rewriting rules in the most challenging spheres of the Indian economy — infrastructure. Straddling airports, power stations, roads and realty, గ్రంధి మల్లికార్జున రావు (Grandhi Mallikarjuna Rao), chairman of the GMR group, is full of more dreams, and ET’s Entrepreneur of the Year.
This serial entrepreneur, with a penchant for executing projects before time, has always been ready to seize every opportunity that came his way. At one point, when India was a licensed economy, GMR had applied for and managed to get licences for a wide range of industries which had very little in common — from earbuds to ferro alloys, jute yarn to sugar, breweries to textiles. What may come as a surprise is that he managed to dabble in quite a few of them, making money every time he exited.
“My father has always believed in focusing on one project till such time that we secure it,” says Kiran Kumar Grandhi, GMR’s younger son who heads the aviation vertical. “This is why we have managed to be successful in whatever we have taken up. Perseverance and single-point focus is the clear message for all of us.”
Daring is a trademark with GMR, even in the most unlikely arenas. He, for instance, accepted the challenge of changing his dietary habits and venturing into non-vegetarian food during his college days, to prove a point to his fellow students. “My classmates at Vizag Engineering College called me pappu (a simple, vegetarian village boy) as I had came from a Dhumpbaldi — a ‘sweet potato school,’ a nickname alluding to village schools in interior Andhra where children would eat roasted sweet potatoes as a special treat,” recalls GMR, revealing that he was the first in his family to join an engineering college.
“They found it difficult to believe that I could contest student elections and often ragged me for being vegetarian. But I had great support and I was not willing to let them down; I won the election and became general secretary of the students’ union. That’s the time I also took to non-vegetarian food like fish to show I could match them on all counts!”
This passion for challenge has not only seen GMR scripting his own story, but also changing his characters and goals to cope up with changing scenarios. His foray into the power sector, for instance, was thanks to the imposition of ‘prohibition’ in the state. In the early 1990s, GMR Technologies got a licence for breweries. Land had been bought and the project was about to begin. Then, chief minister NT Rama Rao decided to impose prohibition in Andhra Pradesh and the company was left groping for an alternative.
“Most of the people had no idea how to deal with that sudden turn of events. But GMR decided to take advantage of a new growth area — the power sector — and soon acquired the licence for a power project in Tamil Nadu, the Basin Bridge power plant in Chennai, which became the first to be developed by the group,” says BVN Rao, a long-time friend and now chairman of the energy vertical. The group now has three operating power projects — Basin Bridge, Tanir Bavi in Karnataka and the Vemagiri Power in Andhra — and has already ventured into the hydel power sector too.
GMR relishes beating competition decisively. Right from those watershed college elections (his victory margin is still a record there!) to bid for road projects where seasoned players were left guessing how the numbers worked, he has a will to win.
“We were always several notches lower in our bid when it came to road projects,” remembers a close associate of GMR, who has been working on the financials of various projects. “Being a first in many, competitors were sceptical. But project execution and financial engineering has been a hallmark of this group. While we bagged projects with low bids, we managed to securitise them as soon they went onstream, which provided us with capital for other projects.”
GMR, who cut his entrepreneurial teeth with a jute yarn facility in Rajam, went on to display his talent in sugar and other agri businesses, ferro-alloys, IT and banking before he finally decided to zero in on infrastructure. It all began when his father, who was a small-time jewellery trader, decided to divide his wealth among his children. GMR’s share of Rs 3 lakh was the seed capital for his first dream project.
“My dream today is to build the group into one of the leading infrastructure companies of the world,” he says with pride. “We have made a beginning overseas with the Istanbul airport project. But lessons learnt from my jute and banking days hold good even today, and I think they have played a large role in shaping my current thinking and outlook.”
Setting up a jute yarn facility taught him a great deal about teamwork and taking his fellow workers along. His banking experience is what he treasures the most. “Turning around non-performing assets and building confidence among customers after a total change in the top management was not easy. We were dealing with public money,” he says. “We had to work individually on each of the NPAs and it required personal relationship skills. It is then that I acquired most of my friends in the banking and financial world.”
GMR, in his capacity as the single-largest shareholder of Vysya Bank, had to walk in almost overnight to rescue it after its then-CEO Ramesh Gelli walked out with the top 100 employees to form the Global Trust Bank. “This was, in some ways, his biggest challenge. It is in his DNA not to leave a project mid-way. We have to pursue it and make it a success,” says BVN Rao.
Running the bank required some tough talking and decisions: in 1985-86, RBI pressurised the bank to increase capital from Rs 60 lakh to Rs 120 lakh. The bank was listed, the shares were sold at Rs 10 each and they gave 18% dividend. Even then, only Rs 30 lakh could be mobilised. He managed just about Rs 3-4 lakh more from friends.
This left him with no other option but to turn to family assets. He persuaded his wife (who is learnt to have been reluctant at that point) to pledge her jewellery, which helped GMR make up the rest of the amount. Even today, he cherishes this example of how his family played a role in building his empire. GMR, incidentally, later exited the bank by selling his around 37% stake to ING.
His entry into the airport sector, however, was a considered decision, and GMR bagged the Delhi airport improvement project and a greenfield airport at Hyderabad. “We decided to get into this sector in 1999 at Hyderabad,” says GMR’s younger son Kiran Grandhi who is now chairman of the airport venture. “That meant dealing with several improbabilities. But we went ahead and it was only in 2004 that we finally bagged the project. We had seen the early bird advantage in other sectors and we were ready to take up the challenge.”
Having relied on taskforces for most of the early projects, GMR has now stepped back to take on the role of a strategiser for the group. And he is taking his new job seriously. A rigorous exercise schedule with meditation is a must to take up the new challenges which require him to stay ahead of the curve — even to beat his sons at the business!
“He is so agile and alert that he beats us at almost everything,” laughs Kiran Grandhi. “I’ve learned most of the things on the shop floor as I was made to get exposure in almost every business of the group. I even spent time at the sugar factory in the village! My father told me that was a live MBA programme!”
GMR, unlike most family-run businesses, has also put in place a succession plan in the form of a family constitution, which has been revealed to shareholders as well, to ensure transparency in operations. On criticism about the family’s role in his companies, GMR has a confident answer: “It’s run by family professionals. Almost 70% of the listed companies on BSE are family-run businesses anyway.”
But even at 58, GMR, has merely written the preface of his entrepreneurship story, it seems. He’s now poised to enter the big league and if early indications are anything to go by, getting awards too could become a habit!
Courtesy: Economic TimesTelugu