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October 30, 2007

GMR gears up for global growth

Business Today has an article on the management recast at the infrastructure focused GMR Group.
The company is looking at other segments to expand its global reach; it is eyeing coal mines in both South East Asia and South Africa to integrate its power business backwards and it is also eyeing other airport projects in West Asia and other fast growing economies. "The competition is much tougher on the global stage. There, we are up against large global infrastructure players and, possibly, some of our partners," says Rao. GMR has already experienced both of these when a consortium it was part of beat half-a-dozen others (including Frapport, its partner for the under-construction Hyderabad International Airport) to win the contract to upgrade the Sabiha Gocken Airport in Istanbul, Turkey. "We have demonstrated our capabilities in delivering projects on time in India across our businesses. Now, we want to take the next step," says G.B.S. Raju, Chairman, Corporate and Internal Services, GMR, who also oversees the company's overseas forays.

Before it can make a global splash, Rao has taken steps to put sufficient management and operational bandwidth in place. Over the last six months, the group has worked with consulting firm McKinsey & Co. to recast its top management and sharpen its focus in each of the segments it is present in. Following this, in early September, Rao took on a less hands-on approach to the company, by becoming GMR's Group Chairman and appointed four business chairmen to drive the company's growth. He has also started the process of appointing CEOs for each of its units, who will be responsible for running the day-to-day affairs of the individual businesses. "The business chairmen will have a strategic role and I will only intervene in exceptional circumstances," says Rao, "but, this is not my first step into retirement; there is a long way to go for us." While professionalism may be GMR's new mantra, the company is not going to lose its family moorings so quickly (See "We want to be a global company").

Rao, who started three decades ago as a jute yarn manufacturer in Rajam, Andhra Pradesh, has transformed the company into one of the best known names in Indian infrastructure. It now boasts a top line of Rs 1,700 crore, but Rao's ambitions are much larger. He is targeting operational assets worth $10.5 billion (Rs 42,000 crore) in four years, compared to Rs 14,000 crore now. Already, the Hyderabad and Delhi airports, managed by GMR, handle a third of the country's air traffic; its power stations generate around 4,000 mw of power and it has built and operates 450-500 km of roads across the country.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.