‘Business environment is changing with the new Govt’

GMR Group has had a rough ride over the last two years with the overall investment climate clouding and the infrastructure sector facing several challenges. This forced the company to exit some of its businesses and go slow in undertaking new projects. GMR Group Chairman GM Rao in an interview with Business Line talks about his company’s go-forward strategy and what he expects from the new Government.

What do you make of the initial moves by the new Government?

It’s highly motivating. The environment is looking good. Prime Minister (Narendra) Modi is spending time to understand issues. Earlier, there were so many layers of decision making. Now, we think it will be faster decision making. There is much clarity on the way forward.

What should be done to encourage the infrastructure sector?

The most important thing for infrastructure creation is availability of long-term finance at lower interest rates. Currently, if you take any project, we are paying 12 per cent interest, which is very high. Also, if the bond market is there, then we will have sufficient long-term capital. We don’t have bond market in India, which makes it difficult (to raise funds). There are also no development institutions other than IIFCL. Banks don’t have long-term funds and their interest rates are higher.

What’s your take on the Government’s intent to allow more FDI, especially in the defence sector?

We welcome FDI as it will be relevant for us on the technology side. In defence, we are spending billions of dollars in imports. We can be exporters like what has happened in the auto sector. In the last five-six years, more than 300 R&D centres have opened in India. It’s because there is knowledge here.

GMR undertook an asset light strategy two years back. Has this been successful?

Yes, it’s been successful. We took this decision at a time when the world economy was volatile, unpredictable and complex. Also, during the last five years, domestic policy decision making has been delayed. So, we decided that instead of building new projects, we went with asset light strategy. Do you plan to continue with this strategy?

The overall business environment is changing. Sentiments have changed after the new Government has taken over. We may not continue with the asset light plan. We may take a more balanced view and go for a growth strategy. We will finalise our plan after seeing how things pan out over the next four-five months.

Are you planning to divest your coal mines in Indonesia?

No plans as of now. Divestment should be done to make money. When coal prices are low, it doesn’t make it sense for us to divest. If it’s creating profit, we can look at it. If you see the last 40 years, we don’t have any emotional attachment. But at the same time, we don’t divest for the sake of it.

Do you plan to stay invested in IPL?

We thought of divesting, but we didn’t get any offer. But now, we are not selling it. The Delhi team unfortunately have not done well. However, we are making profit for the last three years. Let the team perform and then we will see how to unlock value. We had initially thought of exiting because of the controversies around IPL. But now, we see it’s stabilising and the BCCI is setting the processes in place.

What is your style of leadership and how do you keep employees motivated?

It’s a participative leadership. We run the business like family and run the family like business. We are building national assets and we are merely custodians, so it brings a higher purpose among the employees of GMR. Attrition at lop level is less than 1 per cent. We have developed our own training programme to meet the demands of PPP infra projects.

Has your electronic manufacturing hub under the IT Ministry’s M-SIP policy received any interest?

We are closely working with Japanese and (South) Koreans companies. They are taking time to understand the advantages. But M-SIP is a very good policy.

What are your plans in the energy sector?

Focus is to sweat present assets like thermal assets and improve operational efficiencies. We are working with Government on our gas assets, which are stranded now. Going forward, we are exploring renewable energy. Fuel security is a big challenge. We may be slightly late, but there is enough opportunity. There are lot of investors looking in this area. The new Government is also betting big on renewable energy.

Have you put in place a leadership succession plan within the organisation?

We have three levels of succession plan for emerging leaders and senior leaders. We have structured leadership development programme for identifying talent and horning it. For every critical role, there has to be at least one step in successor. That person is mentored, coached over time. There is a unique process where we rotate our five business chairmen every four years.

What about your successor?

There is family constitution which very clearly specifies when I have to retire.

I don’t nominate my successor. Other members have to nominate and if there is a deadlock, there is a deadlock trustee.

Once I announce my retirement in one-two years, my successor will be selected.

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