India's infrastructure barons: Part 1

Two new infrastructure tycoons have emerged in India. In this interview, GVK's GV Krishna Reddy, winner of the Mumbai airport brownfield expansion, discusses his Mumbai airport plans and why he will continue to pursue his passions for tennis and infrastructure.
How did you get into infrastructure?
After completing my education I joined my familyÆs construction business, involved in construction of dam, canals, etc. I was fortunate to oversee the construction of the Nagarjuna Sagar and Srisailam projects for which we were one of the contractors. These projects were very complex in nature involving constructions of canals, under-tunnels, etc..

I thoroughly enjoyed working on these challenging projects. The initial exposure to the complexities of the infrastructure projects has made me very passionate about them. Even today I get very excited when we discuss infrastructure projects which we are executing. Not very many opportunities were available in the infrastructure sector those days, as the government was involved in these projects.

What other businesses have you been involved with?
I ventured into manufacturing by setting up a pre-laminated particle board unit - Novopan Industries. Later with the regulations changing in India I got into the hospitality business. I set up HyderabadÆs first luxury five star deluxe hotel after which I went on to add another five star hotel to my portfolio.

You left India and lived in America for many years. What made you leave?
Being young and restless I was growing increasingly frustrated by the prevailing business environment in India especially the ôlicense rajö. With my contacts that I had developed while I was setting up Novopan, I moved my base to the US and was there for more than a decade. I set up GVK America INC in the US based on reverse flow of technology from India to the US.

When did you come back to India?
In 1991 India started opening up and the government was inviting non resident Indians to return to India to set up business here. The then chief minister of Andhra Pradesh persuaded me to return and set up business in the state. We were successful in getting a gas based power project in the competitive bidding process, which later became one of the eight fast track projects which were being set up.

What was your experience in setting up projects in the the power sector?
The fast track project at Jegurupadu (in the state of Andhra Pradesh) was a 235MW gas based combined cycle project which was commissioned in 1996. The plant has since been operating at availability factors of above 90%. Subsequently it was expanded by increasing its capacity by another 228 MW.

We are now setting up other thermal and hydel power projects in Andhra Pradesh, Punjab and Uttaranchal.

How did your background position you well to win the bid for Mumbai airport?
My background in construction made it easy for me to understand what was necessary to implement power projects. When other infrastructure sectors like roads opened up for private participation, I was an early mover there as well. We constructed the 93 Km Jaipur Kishangarh Highway which was inaugurated two years ago. This was IndiaÆs first six lane BOT (build-operate-transfer) highway. I believe in doing good projects with reasonable returns.

Without losing focus on infrastructure projects I am growing my hospitality business by setting up five star hotels in Chandigarh and Chennai. The hospitality business will also be extended to Bangalore. On the anvil is one more hotel in Hyderabad. We are also setting up a world class mall in Hyderabad, as part of our foray into urban infrastructure.

I always wanted to do something bigger and better - something which will leave a mark for a long time to come. I thought that I should turn my attention to ports and airports.

The airport process been fraught with controversy. What made you optimistic about the outcome?
Airports privatization in India has had its hiccups but all that is behind us now. The current government is very keen to take the privatization of airports forward though there are noises against it.

What is your plan for Mumbai airport?
We were awarded the operations management and development of the Chhatrapati Shivaji International Airport in Mumbai. We intend to create a world class facility. We have created a new identity for the airport taking the exquisite beauty of the peacock feather. Our new logo the peacock feather symbolizes beauty and knowledge and vibrant tapestry of IndiaÆs rich heritage.

How are you financing the project?
Within three weeks of our being awarded the airport we secured an in principle letter of commitment for financing the project. Our lead banks are IDBI Bank and UTI Bank who are syndicating the required debt. Global banks are also providing loans for the project.

We have never encountered any problems in raising finances for our projects. Our debt indications are oversubscribed many times over. I remember that in the early 90Æs when the Government of India had opened up the power sector for private participation there was a stipulation that 40% of the debt should be contracted from sources outside India. Today there is no such stipulation as the liquidity in the domestic money market takes care of the requirements of good infrastructure projects.

How are you staffing your projects?
I believe Indians have tremendous capabilities and today the world recognizes this. As far as human resources are concerned we are today in a position to attract the best talent, from within and outside India.

Our businesses can still be called family managed, but the professionals that we employ have a great role to play in them. I donÆt get involved in the day today running of my projects which I believe should be best left in the hands of competent professionals. The daily morning meetings that I hold with the senior executives ensure that I am aware of what ever is happening within the organization.

What are your further plans in the airport sector?
We have the limited first right of refusal on the New Airport that is likely to come up at Navi Mumbai. We will put in a bid for this.

What are your future ambitions, both personally and professionally?
We are basically developers of infrastructure and with the vast experience that we have inculcated, we feel that we are better placed in delivering world class infrastructure projects. I am passionate about tennis - I play tennis daily between 6 AM & 8 AM. I have sponsored Sania Mirza right from the beginning of her career and am also sponsoring a few other budding tennis players.

I would like to continue playing tennis as long as I can and similarly plan to continue to develop infrastructure projects as long as I can.

For the full story see the cover of FinanceAsiaÆs December/ January issue.
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