09 April 2008
GM Rao,The man who wants to build a modern nation in an ancient land!!
HYDERABAD, INDIA — Entering the new airport in this booming south Indian city is like passing through a portal between different worlds.
Approaching from downtown, visitors travel along a road choked with cars, taxis, scooters, motorized rickshaws, ancient buses and the occasional hand-pushed cart. Women in saris dig at the median with crude hoes in an attempt at landscaping. Barefoot boys block a lane of the roadway with rocks so a creaking steamroller can lay asphalt.
Overhead, a new flyover that is supposed to transport travellers above the bedlam stands unfinished – like just about every public building project in India, way behind schedule.
At the access road to the airport, everything changes. Smooth, freshly laid asphalt leads past an immaculate 3,500-space parking lot lined by palm trees. A massive terminal building with a wave-like roof and towering glass walls rises in the foreground. All is new, clean and modern.
Airport developer G.M. Rao is modernizing India's crumbling infrastructure.
By the numbers
Name: G.M. Rao
Net worth: $5.2-billion
Residence: Bangalore
Main Industry: Infrastructure
Family: Married, three grown children
Education: Graduated in mechanical engineering from Andhra University in 1974
Biography: Started business life as a jute trader, then moved on to rice and sugar milling, then banking, before settling on infrastructure.
Captured attention by winning a contract to build a new airport in Hyderabad and completing the project, on time, in three years. He is also helping to renovate the Delhi airport and recently won a competition to construct a new airport terminal in Istanbul.
Two sons and a son-in-law act as his lieutenants.
G.M. Rao tells Marcus Gee why this is India's time, and why it can't afford to make mistakes now.
the man who would rebuild India.
To first-time visitors, India sometimes seems like a place where everything is dirty or broken and nothing ever gets done. Their introduction to the rising “New India” is often a rundown airport with smelly toilets – followed by a ride in a rattletrap taxi through slum-lined streets to a city where the lights go on and off for lack of power.
Mr. Rao wants to change all that. The barrel-chested former jute trader who has made a fortune building airports and power plants says there is no reason on earth why India has to be a living museum for crumbling roads, half-finished overpasses and congested seaports.
To prove that his country can do better, he has just built a temple of aviation that rivals anything in China, Japan or Singapore. “We want to show that Indians can also build airports,” he says. “We want to show the world.”
If anyone can do it, it is Mr. Rao. His GMR Infrastructure has jumped ahead of rivals to win not just the Hyderabad contract, but the job of modernizing New Delhi's overcrowded and dilapidated international airport. He beat Indian mega-tycoon Anil Ambani, the world's sixth-richest man, for that one. The first phase of the $2-billion (U.S.) project is due to be finished by 2010, in time for India to host the Commonwealth Games.
Last July, GMR also won the $2.7-billion contract to develop a new international terminal at Istanbul's Sabiha Gokcen airport, working with a Turkish construction company and its Hyderabad partner, Malaysia Airports Holding Berhad.
It's quite a feat for a village boy who admits he had to repeat Grade 11. Mr. Rao, 57, is an unusual figure in the world of Indian billionaires, a self-made man among the polished, foreign-educated scions of wealthy families who head many business houses.
Telling stories over a lunch of lentil curry, or striding around the airport trailed by underlings, he has the air of a village headman showing off the wonders of his hometown. But his ambitions are for all of India.
The TV ads for his GMR Infrastructure say it is “getting India ready.” Ready, that is, to join the fierce competition of the global economy. India is already on the way. Led by a new breed of confident, ambitious tycoons like Mr. Rao, it has been registering growth rates of 8 or 9 per cent a year. It cannot possibly sustain that pace without the modern roads, bridges, airports and electricity supplies that are the veins and blood of modern commerce. Mr. Rao plans to build them.
Hyderabad airport is his pride and joy. The terminal building, by Hong Kong-based architect Winston Shu, is a striking medley of glass, marble and teak-toned wood. The firefighting equipment is from Austria, the landscaping from a top Hong Kong designer. GMR even sought out the best kind of drinking fountain, imported specially from the United States.
More is to come. Mr. Rao foresees an “aerotropolis” of new hotels, schools, malls and hospitals surrounding the airport, which is built to handle 12 million passengers a year but will eventually expand to take 40 million.
“I want to make Hyderabad the Vatican of aviation,” he said.
His ambitions aren't limited to airports. GMR has three operating power plants around India and plans for several more. It builds and operates highways, with about 500 kilometres of road laid so far. It is looking to expand into coal mining, electricity transmission, nuclear energy and special economic zones, or SEZs.
Impressed, investors have pushed GMR Infrastructure stock up fivefold since it was issued in August, 2006, making Mr. Rao, 57, India's 13th-richest man on the Forbes magazine listing, worth $5.2-billion.
Grandhi Mallikarjuna Rao grew up in Rajam, an obscure village in the southern state of Andhra Pradesh. His father, a jewellery merchant, divided his estate into four lots for his four sons. Mr. Rao got one house, one truck, three acres of land and about $7,000.
Humiliation was his first spur. When his friends teased him about flunking Grade 11, he repeated the year and got top marks in the district.
He started off peddling jute yarn from farmers to wholesalers, travelling around the district by bicycle. He moved by turns into jute mills, rice mills, sugar, brewing and banking. He even tried making cotton ear swabs for export.
He got into infrastructure by accident. He was about to invest in a big brewery when he learned that a new state government was about to impose prohibition. So he switched into power generation, then just being opened for private investment. He soon realized the potential in a country with few decent roads, ports or airports, and cashed out of most of his other businesses.
“Today everyone's into infrastructure,” says Luis Miranda, whose IDFC private equity group has invested in GMR. “They were the first to pay attention to it, way back before it became fashionable.”
Associates say Mr. Rao has succeeded because he is willing to learn, scouring the world for expertise and technology. “It's not, ‘I'm sitting on top of the world' with him,” says B. Kamesh Rao, who led the construction of the Hyderabad terminal. “He works from the position of ‘I don't know; I want to know.'” Mr. Rao himself makes humility one of the company's core values. “If you do not have humility, you cannot listen to people,” he says in English heavily accented with his native Telugu.
On a tour of the airport, trailed by helpers and colleagues, he probes his people about everything from the protruding wires of an unfinished kiosk to the way the windows will be washed.
To make sure things got done right and on time, he sent his Hyderabad IT staff to Athens for training. Others went to study top airports in Singapore and Kuala Lumpur. To make extra sure, he put his son Kiran Grandhi in charge of the Hyderabad project and his son-in-law Srinivasa Bommidala in charge of the New Delhi expansion. He takes family ties so seriously that he drew up a 150-page “family constitution” to regulate things like conflict resolution and succession planning.
He takes his roots just as seriously. He says he has invested more than $100-million in his hometown. On a recent visit to Rajam, he fed 25,000 people at a village festival, personally helping to hand out a new sari to every woman and a wraparound longhi to every man.
Mr. Rao's success in Hyderabad could provide a template for solving India's infrastructure woes. The Reserve Bank of India said in a recent report that “infrastructure bottlenecks are emerging as the single most important constraint on the Indian economy.” Planners estimate that India needs to boost infrastructure spending to 9 per cent of gross domestic product from the current 5 per cent to fix the problem. That means raising $500-billion by the end of 2012.
That's a lot of money even for a growing global power of 1.1 billion people, and some investors are reluctant to take a risk on projects that are often held up by government red tape or public protests. The Hyderabad project eased those risks by bringing GMR and the state government together in a public-private partnership, or PPP. It is also a build-own-operate project, giving GMR the incentive of future profits. Company executives have said they expect to make money in the airport's second or third year of operation.
Mr. Rao hopes that other states will see his new airport, get jealous and seize the opportunity to act. But with India's economic future in the balance, he says there is no time to waste.
“This is our time. This is India's time. We won't get this opportunity again. If we miss it, we miss it eternally.”
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