Landing with success
The brand new terminal at the Indira Gandhi International Airport of New Delhi marks the culmination of a long journey for Rao.
Grandhi Mallikarjuna Rao" hspace="5" width="100" align="left" src="/newsimgfiles/2010/july/01072010/070210_01.jpg" />The last few weeks have been busy for Grandhi Mallikarjuna Rao, the 59-year-old chairman of the Bangalore-based GMR group. He first sold to EID Parry of the Murugappa group his sugar business (two mills in Karnataka and one in Andhra Pradesh), and then signed a deal with the Maldives government to expand and manage the Male International Airport. But the crowning glory will come tomorrow, when Prime Minister Manmohan Singh and United Progressive Alliance Chairperson Sonia Gandhi will inaugurate the brand new terminal at the Indira Gandhi International Airport of New Delhi.
It will be the fifth-largest terminal anywhere in the world, with 78 aerobridges and a front façade that measures 300 metres. For travellers, “T3” — the new terminal, will be a pleasant change. For Rao, it will be the culmination of a long journey that began in Andhra Pradesh well over three decades ago.
Rao started life with Rs 3 lakh, one truck and two acres of land — his share in the division of the family assets. He resigned his job with the Public Works Department and set up no fewer than 28 agro-based ventures: Jute mill, rice mill, sugar mill, brewery et al. In 1985, he became a large shareholder of Vysya Bank. When some senior executives left, Rao began to run the bank.
In the mid-1990s, it was clear to one and all infrastructure will become the next sunrise sector. Rao began to sell his assets — brewery to Vijay Mallya, bank to ING, and life insurance to Rajan Raheja etc — so that he could enter the capital-intensive infrastructure sector. In 15 years, GMR has put up power projects of over 800 MW (over 5,000 MW is under construction or on the drawing board), constructed roads of 420 km (another 310 km is in the pipeline), bought Dutch power utility InterGen for $930 million, developed a brand new airport at Hyderabad, built a new terminal at the Istanbul airport and now given a facelift to the Delhi airport.
Of course, this has made him a rich man. Forbes last year put his net worth at $4.3 billion (over Rs 20,000 crore). And he has begun to do what a resourceful man is expected to do. He bought the Indian Premier League franchise for Delhi. (The buzz in the capital is that Rao, once in the tobacco business, was well known to Lalit Modi of IPL because the Modis run cigarette maker Godfrey Philips.) Last year, his name came up as a suitor for Liverpool Football Club with a cheque of 450 million pounds ready. It turned out to be just a rumour.
In spite of all his wealth, Rao has a simple lifestyle. No fancy cars for him; family rules require him to drive around in a Toyota Camry. Rao begins his day at 4 with a jog followed by meditation. He works beyond midnight. Catnaps in the car during commutes keep him fresh throughout the day. He can be found with his arm around the shoulders of the smallest employee, enquiring about his family. He loves to recount stories of his early struggles in business. Those who know Rao well describe him as earthy man with no pretentions. “He is an on-the-ground entrepreneur with high native intelligence,” says Vinayak Chatterjee, the chairman of infrastructure consultancy Feedback Ventures.
Some others see a distinct pattern in all his ventures — these are all in sectors with some amount of government regulation. “Rao is good at managing the environment,” says a Delhi-based businessman. The coincidence cannot be missed — sugar, brewery to roads, power and airport are all regulated sectors. Rao, mind you, started out in business during the licence raj. Skills acquired during those days serve him well to this day. Rao declined the request for an interview for this article.
Indeed, the Delhi airport had faced more than one hiccup, including some from within the government, but Rao was able to overcome all of them. Rao had proposed to sell land within the airport to real estate developers and plough the money into the venture as equity capital. Some sections of the Union Civil Aviation Ministry cried foul. This would pull down the profits of the venture in which the Airport Authority of India happens to be a stakeholder, they argued. But the opposition slowly died down. By then, real estate prices had crashed. Instead of the Rs 3,000 crore he had initially expected, all Rao got was Rs 1,200 crore. The government then allowed him to charge an airport development fee to travellers to cover the shortfall. A National Facilitation Committee was set up under the Cabinet Secretary, the country’s topmost bureaucrat, to iron out all glitches in the project.
Rao is a trailblazer amongst Indian business families. The Raos were the first to write a family constitution. After them, others like the Bharatrams of SRF have come out with a similar document and the Godrej family is known to have put one together. While sitting across the table with his debtors at Vysya Bank, Rao realised that enterprises come to grief because of family feuds. To avoid that, the Raos carried out extensive studies to find out what can cause discord in a family. Finally, British family business expert Peter Leach was called to codify the constitution. It lays down the family values, sets out a mechanism to resolve disputes, and specifies succession principles as well as the norms for media exposure. It even provides a forum for spouses to get together and air their differences.
Each business vertical of the group has a chairman. The tenure is fixed for three years. The view in the family is that a new venture is best driven by the promoter, and once it has hit a certain scale, it should be run by professionals. Any family member who wants to try his hand at politics has to exit the business. The family is known to have deliberated the constitution for over 600 hours. It better be robust.
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