GMR Group has things working for it thanks to GMR Rao
Josey Puliyenthuruthel April 12, 2011By revenues and scale, the companies of G.M. Rao, 60, may lag behind those of other businessmen who have come out tops in the last two decades. But there is no denying his family's influence - power and contacts, to be less politically correct - in India.
Whispers in New Delhi's corridors of power claim Rao - after whom the GMR Group takes its name - has connections on par with the most networked businessman to have lived in India, Dhirubhai Ambani. Difficult as it is to validate that comparison, it is common knowledge among air traffic controllers that GMRowned jets ferry the most powerful in the land.
But, to credit GMR's achievements over the past four decades or so to just his relationships would be completely erroneous. The group, today with assets of Rs 25,000 crore in operation and Rs 27,500 under construction (revenues around Rs 4,560 crore in 2009/10), has had several other things working for it: focused and nose-to-the-grind execution, calling bets on high growth businesses right, and blending crack professionals with hard-nosed family members into an A-team.
Rao's construction roots are in the public works department, or PWD, of his home state, Andhra Pradesh. (He grew up in Rajam village, Srikakulam district, some 120 km northeast of Vishakhapatnam.) After graduating in mechanical engineering from Andhra University, where he was a student leader, Rao worked briefly at a paper mill in 1973 before working for a PWD executive engineer.
"My life can be split into five parts: student leader, trader, manufacturer, banker and infrastructure developer," says Rao. He set up his first manufacturing operation - a jute unit in Rajam - in 1978, and over the Licence Raj years set up 28 units in steel rolling, ferro alloys, sugar and alcohol, among others. But prohibition in Andhra Pradesh under the N.T. Rama Rao government in 1983 forced him to look outside the state: a search that ended with the family controlling a bank (today, ING Vysya), the country's second private power generation company, several road projects and, eventually, airports.
Rao, who likes to model his family on the best practices of European business families ("it has 35 families who have lasted more than 300 years"), has had for several years a family constitution in place. Rao chairs a family council that counts son-in-law Srinivas Bommidala, and sons Kiran K. Grandhi and G.B.S. Raju as members. Their motto: run the family like a business, run the business like a family.
The family members are involved in the business - Bommidala runs the group's highways and urban infrastructure business, Grandhi airports, and Raju international business - but "in course of time, they won't be in operations," says Rao. After he retires in 10 years, the council will either work as a threeperson unit or rotate chairmanship.
The family council meets regularly to sort out even the smallest of issues and often has the women members of the family participating, says Rao. "Without family governance, the circle is not complete; only then, real corporate governance will come," says Rao.
So strong are the rules of the family constitution that Rao's sons and son-in-law refused to be photographed for this story, saying that they wanted the focus to be firmly on the group. Still, if you want to see the family and people behind GMR, visit www.bit.ly/gmrpic. Do so before the family council decides to take it down.
Stay with us to find out who else made it big in the post-reforms period.