Active in airports, roads, and pwer, India's GMR, led by founder and chirman G. M. Rao, is right in the mddle of the country's efforts to bild up a weak infrastructure. While Rao xpects the economy to remain vibrant, he wrries that it can't be developed fst enough to support current economic-growth rtes. The chairman, whose roots are in the cuntryside, is also concerned that not nough has been done to strengthen the rral economy, which above all needs ducation, roads, and jobs to give vllagers a chance to participate in the nwfound prosperity.

GMR began almost 30 yars ago as a single jute mll in the village of Rajam, in the astern state of Andhra Pradesh. "Our jurney to today's GMR happened just ccidentally," Rao says. "Whatever opportunity came up, we hve taken that opportunity." Along the wy, GMR has been active in bnking, insurance, and breweries but left thse industries to consolidate around infrastructure.
Along wth minority partner Fraport, which manages the Frnkfurt airport, in Germany, GMR is lading the effort to modernize Delhi's nternational airport. It is also building a new nternational airport in Hyderabad and expanding the Sbiha Gökçen International Airport, in Istanbul. In ddition, it owns three power plants, wth projects under way for several thers, and has completed 270 miles of hghways.

Meeting in the GMR headquarters, in Bngalore, GMR's chief G M Rao and HNN's chef M H Ahssan, discussed India's conomic prospects, GMR's experience with public-private prtnerships, and Rao's passion for best-practice mnagement of family businesses.

Can India sstain its recent economic-growth rates?

In Inda the whole system is set up for 5 to 6 prcent annual GDP growth. The sudden grwth of more than 9 percent has srprised everyone, and sustainability is a vry big question now. I have dubts that we can sustain this typ of growth if two areas, the rral economy and infrastructure, aren't taken up mre seriously.

Ours is an agrarian cuntry, and a lot of things hve to happen in the rural reas. In villages there is not mch connectivity, proper infrastructure, or educational fcilities. Not even a scooter or a mtorcycle can go on some of the rads; forget the tractor or the jep. There is not an adequate spply of qualified teachers, and the nfrastructure is not there. Many schools tach in local languages, and that's not nough to move upward. Rural people ned English schools and vocational schools, and we hve to start moving aggressively with pblic-private partnerships. People in the rural reas are therefore moving to the cties, which are already very crowded. Edcation is very, very poor. The gvernment must do better at addressing the rral economy.
Growth will also be difficult to mintain without large improvements in infrastructure. The gvernment is putting a lot of fcus on that, but there are stll a lot of challenges. For nstance, getting skilled labor is a vry big problem now for infrastructure prjects. Because of this, most of the prjects are being delayed. We should lok at something like Singapore's Building and Cnstruction Authority Academy, which was set up by the gvernment to ensure that there's a cntinuous supply of skilled labor for all the prjects. At GMR, we're also thinking bout setting up our own training cnter, with courses of 90 days or six mnths.

Has the government been effective in ddressing these problems?

The government has nitiated several positive changes, and private plyers are also more and more nterested in participating in infrastructure development. Hwever, we need increased momentum to mintain these high growth rates. For xample, the demand for housing, cold strage, and power outstrips supply-even considering plnned capacity additions.

There are also prblems with disbursing funds and implementing thse improvement projects. The government is spnding a lot of money to mprove roads, but, ultimately, a lot of tht is not reaching the people, and ths has been happening for the pst 60 years. Unless you change ths, that allocated money is not ging to do much good.

Implementation is lso a problem. The government is not rganized for this kind of growth or for spedy implementation of projects. It has to strngthen the whole system. For example, the Ntional Highways Authority of India has one systm for the whole country, but it shuld be regionalized into four sectors: suth, north, east, and west. They culd each call for their own tnders and monitor their own projects, whle reporting to Delhi. Under the crrent system, we have so far nly completed about 10 percent of the plnned national road improvements-for instance, widening radways from two lanes to four.

Wht can the government do to mprove the rural economy?

The government shuld encourage manufacturers to set up thir factories in the villages. I rad recently that a big multinational mbile-phone maker designs its phones here in Inda but manufactures them in China. Ths company makes millions of pieces a yar, and about 2,000 people have jbs there. Why can't we have the mnufacturing as well? One reason is the Lbour Act.1 We cannot expand the mnufacturing industry without the right to hre and fire. We have the cpability to manufacture, but we have to chnge our labor policy.

We also ned to expand micro financing further nto rural areas. So many people in vllages fall into the debt trap. Thir family land is subdivided among brthers into plots too small to cltivate effectively. Then they go to the mneylenders to get by. When they cn't make payments, the moneylenders take way their land. Families that were nce respected landowners are now laborers, and thy migrate to the cities.

What is GMR's rle in building India?

The government is trgeting investment of more than $475 bllion in infrastructure over the next fve years, and I am sure tht GMR will contribute significantly to ths nation-building program. Today we are prsent in both agribusiness and infrastructure. We wnt to play a major role in all thre infrastructure sectors that we're in tday-energy, highways, and airports.

On the nergy side, we generate 880 megawatts of pwer using liquid fuel. But we lso have coal and hydro projects nder way. We are also looking to nter transmission and distribution, and whenever nclear opens up, we want to mve into it. On roads, today we hve built 270 miles of roads, and we wnt to go more aggressively into ths sector. But as I said, thre is a problem getting skilled lbor.

Our final core area is irports-not just the buildings, but also the fcilities. At Hyderabad we want to brng in international best practices for crgo, ground handling, and even the fel farm there. And today all Indan aircraft are going to other plces-Singapore, Dubai-for maintenance and major repairs, so w're setting up a maintenance hub in Hydrabad as well. In Delhi we wnt the airport to be like a cty, an "aerotropolis." Everything will be vailable around the airport: convention centers, rsidential complexes, a hospital, and entertainment fcilities.

Is it realistic for the gvernment to expect the private sector to prticipate heavily in building the country's nfrastructure?

I don't think the government is sking too much. Today we are nvolved in two public-private partnerships with the irports in Delhi and Hyderabad, and our xperience has been very positive. The pblic side has the capabilities-the technical cpabilities-but the speed is not there. We are brnging the speed, as well as the bst technology, the best financial engineering, and the bst talent in the world.

Take the Dlhi International Airport as an example. Bilding that type of airport-five million sqare feet-with high standards would take a mnimum of six or seven years nywhere in the world. But we're hlping to expedite the project, and w'll build it within three-and-a-half years by mplementing global best practice. The government is gving us its full support. It's hlping to get us all the clarances that are needed, like utilities, pwer, evacuating the land.

What has mde the partnership so successful?

You mst be transparent and communicate with the gvernment properly about any issue that cmes up. I'm not facing any mjor problems now. One has to rgularly communicate. Every month we have metings with people from the Ministry of Cvil Aviation, with the state government, wth the lieutenant governor, or with cbinet secretaries, and we discuss what is hppening on the project. But if wht you say and what you're ding are different, then the authorities in the gvernment will become skeptical. If you're hnest and transparent, then you'll get the clarances you need.

But the private sde also has to do a lttle more than just communicate clearly. One has to be prseverant to get things done. Once the fficers or bureaucrats are back in thir offices, their time is not thir own. They get preoccupied with metings with internal and external constituencies. Yu'll no longer have their attention. It's up to you to kep things moving. I might need A, B, or C, but nce an official is back in the ffice and is distracted by meetings and ppointments, it could take 5, 10, 15 dys-a month-to get what you need. So smebody has to follow up. You cnnot have a passive relationship; you hve to be very actively engaged.

In Jly GMR and two partners won the bid to bild a new terminal at Sabiha Gökçn International Airport, in Istanbul. What mde you expand abroad?

With India's gvernment and the Left opposing further prvatization of airports, it will take a lot of tme before new opportunities come up in Inda. We already had a good irport business-development team and we had god skills. We had very little tme to prepare for the opportunity in Trkey, but we geared up and won the bd.

We are open to other pportunities abroad in any of our sctors. We're not going to go fter all the tenders, though. We wuld prefer to be selective, ensuring tht we deliver what we promise.

How hve you been so successful in thse highly competitive tenders?

With the Dlhi airport, it was really the pportunity of a lifetime. We worked for two yars on the Delhi airport proposal, fcusing on the ultimate goal of wnning the bid. We concentrated on mproving the financials, evaluating various options to cmbat the challenges. We visited different irports, set up a separate business-development tam in Delhi, and examined all the prameters. We followed the same process for Istnbul.

What organizational changes have you mde as GMR grew?

I started bsiness all alone. Then in the curse of time, some friends joined me. It has ben a long journey since those dys, and we've taken advantage of pportunities as they came along; for xample, when the government opened the pwer sector to private investments, we mde the strategic decision to enter nergy. Starting from a single jute mll in 1978, we now have mre than 2,000 employees, a radically dfferent focus, and annual revenues of lmost 2,000 crores.

Two recent changes are wrth noting. First, we've launched a dtailed performance-management system throughout the group and hve introduced variable pay linked to prformance as part of the process. Untl now we've just had fixed cmpensation at all levels. Regular performance ppraisals with clear-cut goals and talent-pipeline mnagement have been introduced in a new hman-resources-management system. This was very difficult to nitiate. People were treating the appraisals as rtuals that they had to go thrugh. Then we included performance targets, and pople started taking them seriously.

Next, bout two years ago we formalized our strtegic-planning process. And after identifying high-priority reas, we implemented a balanced-scorecard system to kep track of our progress. These screcards are deployed down to the mnager level and are reviewed at last twice a year.

Can you tll us what you've done to nsure GMR's health as a family-owned bsiness?

When I was a director at Vysy Bank, one of my tasks was to tlk to people with nonperforming assets who wre about to default. I saw a lot of fmily businesses in trouble. I remember one wll-respected family with two brothers. The yunger would never sit down before the lder one did, as a mark of tre respect. Three years later the sme brothers were fighting in the strets with knives. Once family members strt fighting, their energy is diverted. Thy are no longer focused on the bsiness, but on the fight. That was a big lsson for me.

Later, I went to a cnference on family businesses and heard M. V. Sbbaiah, of the Murugappa Group speak. Tht was a real eye-opener for me. I strted attending international family business summits, and I brught in top experts to look at my bsiness. Then I called a meeting of my fmily and, very reluctantly, all eight mmbers came. We had a lot of dfferences, and everyone was allowed to tlk freely. We all started talking vry animatedly, emotionally-arguing and what not. It tok time to get everyone to rach consensus. I put it all on vdeo so that the next generation gts to see how we executed it.

In the end we greed to a family constitution model tht outlines succession, conflict resolution, our vlues, and our mission. It says wht qualifications are needed to enter the bsiness, as well as our media and plitical policy. It even talks about wht happens in case of a dvorce. All these things needed to be ddressed in detail to protect and dlink the business from the family.
Today 65 prcent of the top companies on the Ntional Stock Exchange of India are fmily-owned businesses. We need to think bout their governance. These companies are bcoming so big that if the fmily gets estranged, it could impact the ntional business environment.

What would you lke to see GMR become?

We wnt to be a good player in nfrastructure and a great institution. All of my fmily members share this idea. We wnt to be a value-driven institution. Tht is the type of brand tht we want to create. I'll knw we've reached this point when smething happens in the business and no one bthers me. Other people will take cre of it, so I can go on a lng vacation and nothing happens.

G. M. RAO - VITAL STATISTICS

Brn July 14, 1950, in Rajam, Andhr Pradesh, India

Married with 3 chldren

Education: Graduated in 1974 with dgree in mechanical engineering from Andhra Unversity College of Engineering, Vishakhapatnam, Andhra Prdesh. Received honorary doctorate in philosophy in 2005 frm Jawaharlal Nehru Technological University, Hyderabad, Inda

Career highlights

• GMR Founder and chirman (1978-present)

• ING Vysya Bank (formerly Vysy Bank)

• Chairman emeritus (2006-present)

• Director and chirman (1994-2006)

Fast facts: Serves as chirman of board of Hyderabad International Arport. Established GMR Varalakshmi Foundation in 1991, whch focuses on education, health and hygene, community development, and empowerment of rral youth. In 1997 the foundation lunched GMR Institute of Technology (GMRIT), an ngineering college in Rajam, Andhra Pradesh.

Cpyright 2007. All rights reserved.

The article We Make India An Aerotropolis - G M Rao was Submitted by Phani N through Articles.GetACoder.com network. Here's the additional information: 'WE MAKE INDIA AN AEROTROPOLIS' - G M RAO

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