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Active in airports, roads, and p wer, India's GMR, led by founder and ch irman G. M. Rao, is right in the m ddle of the country's efforts to b ild up a weak infrastructure. While Rao xpects the economy to remain vibrant, he w rries that it can't be developed f st enough to support current economic-growth r tes. The chairman, whose roots are in the c untryside, is also concerned that not nough has been done to strengthen the r ral economy, which above all needs ducation, roads, and jobs to give v llagers a chance to participate in the n wfound prosperity. GMR began almost 30 y ars ago as a single jute m ll in the village of Rajam, in the astern state of Andhra Pradesh. "Our j urney to today's GMR happened just ccidentally," Rao says. "Whatever opportunity came up, we h ve taken that opportunity." Along the w y, GMR has been active in b nking, insurance, and breweries but left th se industries to consolidate around infrastructure. Along w th minority partner Fraport, which manages the Fr nkfurt airport, in Germany, GMR is l ading the effort to modernize Delhi's nternational airport. It is also building a new nternational airport in Hyderabad and expanding the S biha Gökçen International Airport, in Istanbul. In ddition, it owns three power plants, w th projects under way for several thers, and has completed 270 miles of h ghways.
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Meeting in the GMR headquarters, in B ngalore, GMR's chief G M Rao and HNN's ch ef M H Ahssan, discussed India's conomic prospects, GMR's experience with public-private p rtnerships, and Rao's passion for best-practice m nagement of family businesses. Can India s stain its recent economic-growth rates? In Ind a the whole system is set up for 5 to 6 p rcent annual GDP growth. The sudden gr wth of more than 9 percent has s rprised everyone, and sustainability is a v ry big question now. I have d ubts that we can sustain this typ of growth if two areas, the r ral economy and infrastructure, aren't taken up m re seriously. Ours is an agrarian c untry, and a lot of things h ve to happen in the rural reas. In villages there is not m ch connectivity, proper infrastructure, or educational f cilities. Not even a scooter or a m torcycle can go on some of the r ads; forget the tractor or the j ep. There is not an adequate s pply of qualified teachers, and the nfrastructure is not there. Many schools t ach in local languages, and that's not nough to move upward. Rural people n ed English schools and vocational schools, and we h ve to start moving aggressively with p blic-private partnerships. People in the rural reas are therefore moving to the c ties, which are already very crowded. Ed cation is very, very poor. The g vernment must do better at addressing the r ral economy. Growth will also be difficult to m intain without large improvements in infrastructure. The g vernment is putting a lot of f cus on that, but there are st ll a lot of challenges. For nstance, getting skilled labor is a v ry big problem now for infrastructure pr jects. Because of this, most of the pr jects are being delayed. We should l ok at something like Singapore's Building and C nstruction Authority Academy, which was set up by the g vernment to ensure that there's a c ntinuous supply of skilled labor for all the pr jects. At GMR, we're also thinking bout setting up our own training c nter, with courses of 90 days or six m nths.
Has the government been effective in ddressing these problems? The government has nitiated several positive changes, and private pl yers are also more and more nterested in participating in infrastructure development. H wever, we need increased momentum to m intain these high growth rates. For xample, the demand for housing, cold st rage, and power outstrips supply-even considering pl nned capacity additions. There are also pr blems with disbursing funds and implementing th se improvement projects. The government is sp nding a lot of money to mprove roads, but, ultimately, a lot of th t is not reaching the people, and th s has been happening for the p st 60 years. Unless you change th s, that allocated money is not g ing to do much good. Implementation is lso a problem. The government is not rganized for this kind of growth or for sp edy implementation of projects. It has to str ngthen the whole system. For example, the N tional Highways Authority of India has one syst m for the whole country, but it sh uld be regionalized into four sectors: s uth, north, east, and west. They c uld each call for their own t nders and monitor their own projects, wh le reporting to Delhi. Under the c rrent system, we have so far nly completed about 10 percent of the pl nned national road improvements-for instance, widening r adways from two lanes to four. Wh t can the government do to mprove the rural economy? The government sh uld encourage manufacturers to set up th ir factories in the villages. I r ad recently that a big multinational m bile-phone maker designs its phones here in Ind a but manufactures them in China. Th s company makes millions of pieces a y ar, and about 2,000 people have j bs there. Why can't we have the m nufacturing as well? One reason is the L bour Act.1 We cannot expand the m nufacturing industry without the right to h re and fire. We have the c pability to manufacture, but we have to ch nge our labor policy. We also n ed to expand micro financing further nto rural areas. So many people in v llages fall into the debt trap. Th ir family land is subdivided among br thers into plots too small to c ltivate effectively. Then they go to the m neylenders to get by. When they c n't make payments, the moneylenders take way their land. Families that were nce respected landowners are now laborers, and th y migrate to the cities. What is GMR's r le in building India? The government is t rgeting investment of more than $475 b llion in infrastructure over the next f ve years, and I am sure th t GMR will contribute significantly to th s nation-building program. Today we are pr sent in both agribusiness and infrastructure. We w nt to play a major role in all thr e infrastructure sectors that we're in t day-energy, highways, and airports. On the nergy side, we generate 880 megawatts of p wer using liquid fuel. But we lso have coal and hydro projects nder way. We are also looking to nter transmission and distribution, and whenever n clear opens up, we want to m ve into it. On roads, today we h ve built 270 miles of roads, and we w nt to go more aggressively into th s sector. But as I said, th re is a problem getting skilled l bor. Our final core area is irports-not just the buildings, but also the f cilities. At Hyderabad we want to br ng in international best practices for c rgo, ground handling, and even the f el farm there. And today all Ind an aircraft are going to other pl ces-Singapore, Dubai-for maintenance and major repairs, so w 're setting up a maintenance hub in Hyd rabad as well. In Delhi we w nt the airport to be like a c ty, an "aerotropolis." Everything will be vailable around the airport: convention centers, r sidential complexes, a hospital, and entertainment f cilities. Is it realistic for the g vernment to expect the private sector to p rticipate 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 p blic side has the capabilities-the technical c pabilities-but the speed is not there. We are br nging the speed, as well as the b st technology, the best financial engineering, and the b st talent in the world. Take the D lhi International Airport as an example. B ilding that type of airport-five million sq are feet-with high standards would take a m nimum of six or seven years nywhere in the world. But we're h lping to expedite the project, and w 'll build it within three-and-a-half years by mplementing global best practice. The government is g ving us its full support. It's h lping to get us all the cl arances that are needed, like utilities, p wer, evacuating the land. What has m de the partnership so successful? You m st be transparent and communicate with the g vernment properly about any issue that c mes up. I'm not facing any m jor problems now. One has to r gularly communicate. Every month we have m etings with people from the Ministry of C vil Aviation, with the state government, w th the lieutenant governor, or with c binet secretaries, and we discuss what is h ppening on the project. But if wh t you say and what you're d ing are different, then the authorities in the g vernment will become skeptical. If you're h nest and transparent, then you'll get the cl arances you need. But the private s de also has to do a l ttle more than just communicate clearly. One has to be p rseverant to get things done. Once the fficers or bureaucrats are back in th ir offices, their time is not th ir own. They get preoccupied with m etings with internal and external constituencies. Y u'll no longer have their attention. It's up to you to k ep 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 d ys-a month-to get what you need. So s mebody has to follow up. You c nnot have a passive relationship; you h ve to be very actively engaged. In J ly GMR and two partners won the bid to b ild a new terminal at Sabiha Gökç n International Airport, in Istanbul. What m de you expand abroad? With India's g vernment and the Left opposing further pr vatization of airports, it will take a lot of t me before new opportunities come up in Ind a. We already had a good irport business-development team and we had g od skills. We had very little t me to prepare for the opportunity in T rkey, but we geared up and won the b d. We are open to other pportunities abroad in any of our s ctors. We're not going to go fter all the tenders, though. We w uld prefer to be selective, ensuring th t we deliver what we promise. How h ve you been so successful in th se highly competitive tenders? With the D lhi airport, it was really the pportunity of a lifetime. We worked for two y ars on the Delhi airport proposal, f cusing on the ultimate goal of w nning the bid. We concentrated on mproving the financials, evaluating various options to c mbat the challenges. We visited different irports, set up a separate business-development t am in Delhi, and examined all the p rameters. We followed the same process for Ist nbul. What organizational changes have you m de as GMR grew? I started b siness all alone. Then in the c urse of time, some friends joined me. It has b en a long journey since those d ys, and we've taken advantage of pportunities as they came along; for xample, when the government opened the p wer sector to private investments, we m de the strategic decision to enter nergy. Starting from a single jute m ll in 1978, we now have m re than 2,000 employees, a radically d fferent focus, and annual revenues of lmost 2,000 crores. Two recent changes are w rth noting. First, we've launched a d tailed performance-management system throughout the group and h ve introduced variable pay linked to p rformance as part of the process. Unt l now we've just had fixed c mpensation at all levels. Regular performance ppraisals with clear-cut goals and talent-pipeline m nagement have been introduced in a new h man-resources-management system. This was very difficult to nitiate. People were treating the appraisals as r tuals that they had to go thr ugh. Then we included performance targets, and p ople started taking them seriously. Next, bout two years ago we formalized our str tegic-planning process. And after identifying high-priority reas, we implemented a balanced-scorecard system to k ep track of our progress. These sc recards are deployed down to the m nager level and are reviewed at l ast twice a year. Can you t ll us what you've done to nsure GMR's health as a family-owned b siness? When I was a director at Vysy Bank, one of my tasks was to t lk to people with nonperforming assets who w re about to default. I saw a lot of f mily businesses in trouble. I remember one w ll-respected family with two brothers. The y unger would never sit down before the lder one did, as a mark of tr e respect. Three years later the s me brothers were fighting in the str ets with knives. Once family members st rt fighting, their energy is diverted. Th y are no longer focused on the b siness, but on the fight. That was a big l sson for me. Later, I went to a c nference on family businesses and heard M. V. S bbaiah, of the Murugappa Group speak. Th t was a real eye-opener for me. I st rted attending international family business summits, and I br ught in top experts to look at my b siness. Then I called a meeting of my f mily and, very reluctantly, all eight m mbers came. We had a lot of d fferences, and everyone was allowed to t lk freely. We all started talking v ry animatedly, emotionally-arguing and what not. It t ok time to get everyone to r ach consensus. I put it all on v deo so that the next generation g ts to see how we executed it. In the end we greed to a family constitution model th t outlines succession, conflict resolution, our v lues, and our mission. It says wh t qualifications are needed to enter the b siness, as well as our media and p litical policy. It even talks about wh t happens in case of a d vorce. All these things needed to be ddressed in detail to protect and d link the business from the family. Today 65 p rcent of the top companies on the N tional Stock Exchange of India are f mily-owned businesses. We need to think bout their governance. These companies are b coming so big that if the f mily gets estranged, it could impact the n tional business environment. What would you l ke to see GMR become? We w nt to be a good player in nfrastructure and a great institution. All of my f mily members share this idea. We w nt to be a value-driven institution. Th t is the type of brand th t we want to create. I'll kn w we've reached this point when s mething happens in the business and no one b thers me. Other people will take c re of it, so I can go on a l ng vacation and nothing happens. G. M. RAO - VITAL STATISTICS B rn July 14, 1950, in Rajam, Andhr Pradesh, India Married with 3 ch ldren Education: Graduated in 1974 with d gree in mechanical engineering from Andhra Un versity College of Engineering, Vishakhapatnam, Andhra Pr desh. Received honorary doctorate in philosophy in 2005 fr m Jawaharlal Nehru Technological University, Hyderabad, Ind a Career highlights • GMR Founder and ch irman (1978-present) • ING Vysya Bank (formerly Vysy Bank) • Chairman emeritus (2006-present) • Director and ch irman (1994-2006) Fast facts: Serves as ch irman of board of Hyderabad International A rport. Established GMR Varalakshmi Foundation in 1991, wh ch focuses on education, health and hyg ene, community development, and empowerment of r ral youth. In 1997 the foundation l unched GMR Institute of Technology (GMRIT), an ngineering college in Rajam, Andhra Pradesh. C pyright 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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