The Big Interview - I have just started

Niranjan Mudholkar , February 16th, 2010

I ‘ve just Started

At his age and with his achievements, it is easy for people to retire on some hill station. But Dr GV Krishna Reddy is thinking about the next larger step. ‘How fast can we run from now on?’ - he asks his team after sweating it out on a tennis court. Niranjan Mudholkar meets him in hyderabad to find out what drives one of India’s finest entrepreneurs

Right at the beginning of the interview, I thank him for giving me time despite being very busy. “No, I am not busy. I have all the time,” pat comes the reply. The implication – ‘I practice time management’. And why not? With projects worth more than Rs24,000 crore under execution, Dr GVK Reddy has every right to be very busy. But he finds time to play tennis every day - and even bets Rs100 on his matches! (That used to be Rs10 till recently). And it was actually another bet during his school days that transformed GVK from a naughty prankster into a successful student.
He finds time to personally visit project sites – whether it is the Mumbai Airport or the difficult to access Goriganga Hydel Project. That’s a habit he developed as a youngster working on projects like the Nagarjunasagar Dam and Srisailam Dam. He recalls working on those projects very fondly. You think he is getting nostalgic after all. But wait. He actually uses the memories to further motivate himself rather than getting sentimental about it.
Achievements give him sleepless night. “When you achieve something, it brings more responsibility with it,” he says adding “Now, you have to achieve something much more than what you have done previously.” And this comes from a man whose parents had put restrictions on his playing because he was never serious about anything including studies. ‘This boy is useless; he is good for nothing,’ declared an astrologer before GVK was 13. Of course, things were to change when he would turn 14. And they did.
“We have identified more airports and are working on them,” he says when asked about the bigger implications of acquiring 29% stake in the Bengaluru Airport. “We keep a low profile but are aggressive. We like to shock people,” he adds. Now you know why he says “Wait and watch,” while talking about his interests in railways and seaports. By now, you have forgotten his age. It is this youthful spirit that comes across strikingly when he says,” I have just started.”

In a very dynamic journey spanning almost two decades, your organisation has been involved in several diverse projects. How has it evolved over the years?
Let me answer your question a little differently. As a youngster, I got into our family business of construction. I was lucky we were doing the works for projects like the Nagarjunasagar Dam and the Srisailam Dam. Nagarjunasagar is the second largest dam in the world. That’s where I got my training and I consider that as the best experience of my life.
Building the dam, working in the river, working the floods, are some of the things that I can never forget. Those are very strong memories. I remember a big bridge being washed away during heavy floods once. It took away several lives with it. The dam overflew and the bridge was in the downstream. Luckily for me, I was standing where the bridge just started. In another instance, people were working on a scaffolding inside a tunnel. The scaffolding collapsed and people were washed away. I can never forget that. The river, which moves like a quiet channel in other times, was flowing quite ferociously during the floods. These are the experiences that teach you important lessons in life.
It was a 24/7 job for me. Nobody had forced it on me. I was doing it because I wanted to do it. And I wanted to get involved in the action. For example, when we were doing the masonry work, we had to get stones from a quarry about 20 km away in the hills. I would travel all the way to the hills to see what was happening out there.
It is these experiences that have given me the strength to go on till today. And even today I get involved at the project sites. When I am in Mumbai every Wednesday at the airport, I don’t sit at the office. I am where the actual construction work is happening. I can see the progress myself and ensure that good quality work is happening. I can just look at the work and tell whether it is happening per the required standards or not.
And it’s not just Mumbai. I have a hydel project happening in Uttarakhand at a place called Srinagar. It is one of the most difficult projects ever undertaken due to the harsh geographical and weather conditions. But I have told my team that until the river is closed, until the foundation is done, until the tunnels are built and until the power house is done, I will keep visiting the site every month. It also motivates the team to work under the extreme circumstances. There is no road that leads to the project site. There is just a trekking track. So, we have to first build a road and in case of some equipment, we have to actually consider dropping from the air.
It is these challenges that have helped us evolve in the construction and infrastructure business. Even the Mumbai airport is one of the most difficult airports in the world to work at due to the intersecting arrangement of the two main runways. But I don’t look at problems as problems. These challenges make me work.
Basically, to answer your question briefly, it is the challenges that have helped me and my organisation evolve.

Just before the recession hit hard – around May 2008, you were planning to revamp the infrastructure business to raise more money. Tell us about it.
The other day somebody was asking me that there was a recession in the country. Things were moving very slowly. How about you? I will tell you what I told him. When there is recession or a problem, there are opportunities. If you do your homework well and keep your reputation intact, then there is no problem.
Credibility is very important in the market. If you make a commitment, ensure that you fulfil it. You should never default. Take loans if required. Make internal changes. But deliver on time or even before. This credibility has helped us. Also, our experience of realigning the projects has helped us.
During this period (2008-09) that we raised Rs1000 crore. And then later we raised another Rs700 crore. Coming back to the restructuring part, what we would like to do is create verticals that cater to each of our segments like power, airports, transportation and so on.

What is the combined worth of the projects that GVKPIL is executing?
We have projects worth approximately Rs24000 crore under execution at present. Mumbai Airport will be about Rs9800 crore, Bangalore Airport would be about Rs3500-4000 crore, Goriganga Power Project would be around Rs3000 crore, Alakhnanada is about Rs3200, Govindwaal sahib is around Rs2800 crore and then we have coal mines worth Rs1000 crore. These projects will be completed by 2012-13.

GVKPIL recently acquired stake in the Bengaluru International Airport Ltd. What kind of revenue potential has this acquisition created? What is the broader implication of this?
Our total stake in the Bengaluru International Airport Ltd now stands at 29%. We had a board meeting on January 19, 2010. The nine months result for this airport is Rs59 crore profit. It is a Greenfield project and it is already making profits. It is a pleasant surprise to us since we were expecting only Rs30-40 crore. It is a good and profitable airport.
The traffic is increasing beyond anybody’s imagination. Currently it is touching 98 million. Next year could be bigger. Hyderabad airport is already under pressure due to the Telangana issue. So that traffic has to move somewhere south.
Secondly, Bangalore itself sees a lot of business. We have also observed that we receive quality passenger traffic at the Bengaluru Airport. It makes a hell lot of difference. The number of airline companies coming to the airport is growing; three new airlines are staring this week itself. So the prospects are very high. And we are really happy about.

Would you be looking at more airports in the near or mid-term future?
As long as it is interesting and profit making, we will look for more airports. In fact, we have already started looking at more airports. Now, we know everything about airports. The operator at the Bengaluru Airport – Zurich Airport – is a cash rich company.
They are operating close to 10 airports in the world. And they have entered into a strategic alliance with us that we will bid for new airports together wherein GVKPIL will have a majority stake. They are interested only in the operations while we will manage and expand. And we are already on the job. We have already identified some airports and are working on them but we can’t disclose the names.
We believe in keeping low profile but being aggressive. People got a shock of their lives when they heard of our acquisition in the Bengaluru Airport. That’s our strategy.

Today GVKPIL has presence in almost all the infrastructure segments except seaports & railways?
Just wait. One at a time. Wait and watch. In fact, we tried in the past but were not successful in entering into these segments. But we are on the job. We are discussing these segments very seriously and we will definitely take them up.

Tell us something about your Group’s foray into hospitality. What is your share in the Taj GVK Hotels & Resorts joint venture?
This is actually my passion. I got into this business out of my personal liking. I wanted to build the best hotel in Hyderabad. Before I came into this business, I was acquiring land at strategic positions. People were actually laughing at me. But when I started building the hotel, the MD of Taj – after seeing the details and design – called me and asked me if I was crazy to build such a hotel in Hyderabad. I told him that he was right but I was building for tomorrow.
Of course, there’s more to it. I had acquired a big piece of land with the aim of building another large hotel with a golf course. Then the government built a road right through my land. The then chief minister of Andhra Pradesh Mr NTR who used to pass through that road wanted to build something on that land. Thankfully for me, I knew the chief secretary who told me that the Chief Minister was looking at the land. I immediately started building the next hotel on that land even before the first one had started making profits.
Soon I did one more hotel. Later when I decided to expand I entered into a strategic alliance with Taj. That time the hotel business was doing as well as it is doing now so I had to give them a 25% stake. They operate the business while I manage the business and have financial control with a 50% stake. Now I have taken over another Hotel – Taj Banjara which was originally built by me. Then I have properties in Chandigarh and Chennai; plus another one is being developed in Hyderabad.
Then I had acquired a site in Bangalore. We are going slow on that because the market was down. But we will build a hotel there as well. We also have a tie-up with Ginger Hotels in Andhra Pradesh. We have the first right; they cannot build a hotel here without us. We will be developing a hotel soon near the airport and may develop another 3-4 after the political problems are resolved.
To put it briefly, we are doing extremely good in the hotel business. In the profit making list, we are ranked 5th.

I understand you are quite passionate about tennis and you have even sponsored some tennis players. What is it that drives GVK the man?
Every human being requires some change, some diversification. I like to play tennis. If I have an early morning flight to catch, I play for about an hour or so and then leave for the airport; otherwise I play for about one & half hour to two hours. You must come and watch me play. I have a good time with my friends. We even used to take bets for Rs10, which has just gone up to Rs100. I have even sponsored a tournament for veterans.
One day a woman came to see. She said her daughter played well and wanted me to sponsor the girl. Although I refused initially I told her that I would like to watch her play first. The next morning I saw her play and felt that she was playing quite well. So I decided to sponsor. That girl was Sania Mirza. And I have been supporting her from that day till toady. She has come up to a level and that is not satisfactory to me. I want only the number one spot for her. But she has done well at least in the country. Now I am supporting ten kids in all. Basically, I love tennis. Personally I play it for pleasure as well as for exercise.

Do you regret that you couldn’t take up the game as a youngster?
My parents had brought restrictions generally on my playing as I used to bunk school and do a lot of mischief. One day somebody got first rank in my school and I took up a bet that I could also get a first rank. Things changed after that bet. I inculcated a lot of discipline and commitment.
I did get the first rank and never changed my habits after that. When I look back, I understand the reasons why my parents had brought restrictions on me. In fact, they had even stopped my studies for one year. Somebody had prepared my jataka (horoscope) and told my parents that ‘this boy is useless; he is good for nothing till the age of 13’. Things changed after I turned 14.

Where do you see GVKPIL in the next five to ten years?
Recently, when the Economic Times gave me the ‘Entrepreneur of the year’ award I didn’t sleep that night. That was the second time in my life when I hadn’t slept. Earlier, I hadn’t slept when I had financially closed a critical project. I felt whatever has happened is nothing. This is just the foundation. I have just started.
When you achieve something, it brings more responsibility with it. People start looking at you. You have to be more careful. And this time you have to run fast. You have to achieve something much more than what you have done. Incidentally, I have been thinking about it while playing tennis this morning.
Immediately after this interview, I have a strategy meeting with my team. I want to understand where we will be tomorrow, what are we going to be tomorrow. What are our plans? Where are we going? How fast can we run? We want to become much larger.
The base has now been created. We would like to expand our power portfolio to 10000mw from the current 2000-3000mw. We would like to take up 1000 km of road projects. These are two targets that I have come up with and others will come up with their own. We would also like to strengthen our position in the Delhi area.