GMR: From commuting on a cycle to building global airports

Close to three decades ago, when people saw Grandhi Mallikarjuna Rao cycling 25 kilometres everyday around his village in Andhra Pradesh collecting money for the farm poduce he had supplied, they never thought he would one day own the first Indian company to develop an international airport.
On 10 July 2007, GMR Infrastructurebagged the contract for an international airport - the Sabiha Gokcen International Airport in Istanbul. Along with its Hyderabad airport partner, Malaysia Airports Holding Berhad, and Limak, a construction company in Turkey, the group will build an international terminal in the Euro 400 million development project.
GMR's stocks jumped nearly 7 per cent, touching a 52-week high after the deal. But this global foray is only an extension of GMR's dominance in India, where it is the only developer handling two airport development projects.
There is the greenfield Hyderabad international airport, which will open by March 2008 and handle around 12 million passengers. It will also be fit to handle an Airbus A380, a vision Rao had seen years ago.
The story behind GMR's success
Two, the Rs 8,000 crore (Rs 80 billion) development of the Delhi airport, which, a year after GMR took over, is acknowledged as the fastest developing airport in the country. The airport will be able to handle around 37 million passengers after the first phase in 2010.
GMR is setting up "aerotropolises" around both airports for premium and business hotels, convention centres, golf courses, and so on. GMR has already invited bids for building hotels on nearly 40 acres of land around Delhi airport. An MRO (maintenance, repair and overhaul) facility with Lufthansa Tech at the Hyderabad airport is also on the cards.
For Rao, it has been a long journey - from handling a jute mill to doing global infrastructure projects. The turning point, self-admittedly, came in 1985 when Rao became a director in Vysya Bank.
"It was in the banking sector that I learnt the lessons of financial discipline and also how projects are structured," says the media shy chairman of GMR who has assets worth Rs 15,000 crore (Rs 150 billion) in airports, power and roads.
When Rao took over the reins of the bank in 1994, its non-performing assets had touched 15.6 per cent. Rao brought in ING as a partner and scaled down the NPAs to 4.5 per cent. He finally sold a 50 per cent stake in the bank and part of the Rs 380 crore (Rs 3.8 billion) from the sale went into the Hyderabad airport project.
Not many people know that Rao's entry into infrastructure was an accident. Rao was all set to invest in a brewery when Chandrababu Naidu tipped him off about the prohibition of liquor distilleries he would announce after coming to power.
Around that time the power sector was opened for privatisation and Rao focused all his energies on the Chennai power project, for which he got the licence. After three power projects in Tamil Nadu, Karnataka and Andhra Pradesh, the company has recently been aggressive about hydro projects with three power plants in Uttarakhand, Orissa and Arunachal Pradesh to be operational by 2010-11.
Rao forayed into airport infrastructure when he realised the uncertainty in the power sector. He was also among the first to be bullish about aviation - way back in 1999 when the Andhra government had just invited bids for the Hyderabad airport.
After Hyderabad was bagged, there were claims that the government would not create a monopoly by giving a second airport (Delhi/Mumbai) to the same developer. But notwithstanding protests from competitors about an unlawful bidding process, GMR got the Delhi airport project.
"Around Rs 34 crore (Rs 340 million) was spent for the bidding. It was a golden opportunity and Rao did not want to miss it," says a company insider and close associate of Rao.
Global benchmarks in sight, Rao even has international models for his family. There is a detailed family constitution detailing Rao's succession, qualifications of family members to enter the family business (they must be management graduates), their remuneration and perks, among other details.
"We decided on a legal framework so that the family stayed together and disputes were solved within it," he said in an interview to Business Standard a few years ago.

Vishal Retail from rags-to riches story

Vishal Retail's impressive opening at the bourses more than proves the credibility and business acumen -- if proof were needed at all -- of its promoter, R C Agarwal.
Vishal Retail, which recently had a Rs 110 crore (Rs 1.10 billion) initial public offering, listed at a 75 per cent premium, rising to Rs 472.50 a share against the offer price of Rs 270. It rose by 178.52 per cent at the close of trade on Wednesday -- the day it listed -- emerging the biggest rise on listing this year.
Agarwal built Vishal Retail from scratch into a chain of highly lucrative hypermarkets and discount superstores.
At just 21, he began his career from a tiny 100 square feet shop in 1986 in Kolkata's Lal Bazaar area, selling readymade garments. He scraped together Rs 1 lakh (Rs 100,000) in family savings and loans from local moneylenders to open this shop.
Agarwal slowly grew the business -- called Vishal Garments back then -- to a few stores in the city. He envisioned a mega store that would sell garments at prices no one could match. This Agarwal achieved through in-house manufacturing.
One of Agarwal's associates reminisces about the days when Vishal Garments was known for the massive rush at the stores around Durga Puja, especially at the abandoned Tiger Cinema that Agarwal had converted into a shop.
But luck was not on his side and Agarwal had to shut shop in Kolkata in 2001, on account of union problems, according to an associate. He packed his bags and came to New Delhi, determined to make it as a big retailer.
Vishal Retail, with a turnover of Rs 50 crore (Rs 500 million), opened the first hypermarket in 2003. Its turnover today is over Rs 600 crore (Rs 6 billion) and its store count stands at 51. Another 32 are scheduled to open this year.
In addition to garments, Vishal Mega Mart stores retail the entire range of household products, FMCG and electronics goods. It offers these at roughly 10-15 per cent less than other mass market labels.
Agarwal says his prices are not a result of a secret formula. "We just cut out the middle-man wherever possible and pass on the benefit to our customers," he says.
But his formula has struck gold. Agarwal targets the middle class, which according to him has the maximum purchasing power along with a high expectation of value-for-money without any compromise on quality. Our competitors cannot match this combination, says Agarwal.
Gopal Jain of Gaja Capital, famous for backing first-generation entrepreneurs like Raghav Behl, recognised Agarwal as a rising "star retailer" almost two years ago. Jain, along with the likes of the Anil Ambani family, Dabur's Burman family and Hero Honda's Munjals, had picked up 10 per cent of Vishal Retail for only Rs 200 per share. Today this consortium is sitting on potential gold.
A close associate of Agarwal draws comparisons between him and the founder of Wal-Mart, Sam Walton.
"Both are from small-towns, started from scratch and built their retail empire in tier II and III cities. Because of Agarwal's vision, he will reach new highs and will emerge as one of the country's most influential people," he said.

The success story of Sashi Chimala

Sashi Chimala is no ordinary entrepreneur. He is not only the 'Jack of all trades,' but -- strangely enough -- even master of all. Even as a young boy Chimala dreamt of becoming an entrepreneur. And become he did. Chimala founded not one, not two, but many companies, and they are in diverse fields like software to coffee to cricket to gaming.
He is one of the founding members of Covansys; founder of Indigo Technologies (which was later acquired in a 2-way deal between SSI and Nasdaq); of Qwiky's Coffee, a pioneering retail venture in Asia; and of CricTV.com, the first social video network for cricket. His recent entrepreneurial venture is Interactive Media Technology Inc, which is to launch knibble.com, an online gaming company on July 11.

Early dreams
It may sound very corny, but my inspiration was Mahatma Gandhi. I always dreamt of becoming an entrepreneur. This may have grown from my obsession with being independent. Both financial independence and independence of thought mean a lot to me.
As creativity is the core component of entrepreneurship, I want to tell you about my cartooning days. I started drawing cartoon, which appeared in almost all Telugu publications, as a schoolboy in Andhra Pradesh. The money I earned went towards my education. By now, I must have drawn around 5,000 cartoons.
After completing engineering at Kakinada in Andrhra Pradesh, I went to Bombay (now Mumbai) for my post graduation.

Moving to the US in 1979
Then in 1979, I went to the United States. I was a programmer at the Tatas. The story of Indian IT outsourcing actually started around that time. TCS and Tata Burroughs were the only two companies engaged in it, and I was in the second batch and the 60th person to go to the US, to be precise.
Those days were difficult because the Americans wouldn't understand our accent. We were treated as 'aliens'! The word alien was an official term to describe an immigrant. Your green card says 'permanent alien' even when we are all human beings and not residents of outer space!
Anyway, we were aliens; we were immigrants, but it was the beginning of Indians making it big in the US.

The US of the seventies and the US of today
America being a country of immigrants, as a rule, is more tolerant of outsiders. But there is a huge difference between the US of 1979 and the US of today. If we were aliens then, today we belong to the most sought after and richest segment. Indians and the Chinese are excelling in mathematics, spelling, and academics.
As an entrepreneur, I saw better chances in the US than in India in those days. If you have a good idea, nothing limits you as an entrepreneur in the US. You don't have to come from a rich family to create a big company; you only need to have a great idea.
Co- founding Covansys
In 1987 I helped Raj Vattikutti to start a company called Complete Business Solutions (later renamed as Covansys). Later, I joined the company and expanded it in the west coast of the US, while Raj was in the east coast. That was how I learnt the ropes of being an entrepreneur.
On the one hand, it was easy since we were among the very few Indian companies, and, on the other, it was difficult because we were trying to prove to the world that Indians were good entrepreneurs.
In a couple of years the message was out that ours was a good company. Immigrants, not just Indians, but all, work hard because they are out there to prove themselves and not enjoy life.

Founding Indigo Technologies
I always wanted to start a company that was into products as almost everyone else was focussing on services. In 1992, I founded Indigo Technologies in Cupertino, California. We built an audacious product to automate stock exchanges. I must say it was quite fulfilling.
Tandem Computers, the de facto providers of stock exchanges and banks liked our product, and they helped us sell it in Taiwan. Nasdaq was already their customer and they introduced us to them. The chief technical officer of Nasdaq went on record saying our product was ten times more saleable than what they had at that time.
Nasdaq Europe and Nasdaq Japan exchanges went for our product. We eventually sold our company when Nasdaq, in a joint venture with SSI, formed a company called IndigoMarkets, which used our software.

Back in India
After living in the US for 20 years, I came back to India because of Indigo Technologies. Tandem became Compaq Computers and took equity in our company, so we had to consolidate all our operations and business. Since we had quite a big team in India, it was suggested that I run the company from here as its chief executive officer.

The new India
And it was quite a homecoming. I came back to a hugely different India -- a new India -- in 1998. In the seventies, I would not have dreamt of launching a company in India. The new India has tasted the fruits of enterprise. It will never go back to the old ways. Launching a new company may take longer in India, compared to the US, but it's still an achievement.

Starting Qwiky's, coffee chain shop
After SSI Technologies bought Indigo, I started Qwiky's Coffee Pub. My wife and I missed a genuine coffee joint. In San Jose, we would often go to Starbucks and have a nice cup of coffee. That concept was non-existent in India.
Retail outlets, at that time, were new to India. Still, against a projected 100,000 cups of espresso in 12 months, Qwiky's sold 365,000 cups! In the first two years, Qwiky's had sold over one million cups of coffee. When I started Qwiky's I had no competition. The very concept was absent. It was frustrating and exhilarating too. I am glad that I could kickstart an industry.
Qwiky's has been remodelled into a franchisee format and will resurface soon in a new avatar.

Indian coffee house in the US and the UK
With Qwiky's I brought the western concept of coffee pub to India. Now I want to take the Indian concept of the coffee house to the US and UK. Coffee houses in India are places where writers, painters, artists and even businessmen met and had serious intellectual discussions.
This is the perfect time to take this concept to the West. Today India is no more an alien nation.

Launching interactive community networks
Since Qwiky's was on well-oiled rails, I decided to focus on the technology sector. The second wave of web technology is approaching and it is going to be very exciting.
That was how the Interactive Ad network and cricket social network (CricTV.com ) came into being. Social networks are going to be the next major thing and it caters to the youth market. As cricket is still an untapped market, we decided to start a social video network for cricket fans that serves as a video sharing platform (similar to YouTube) where anyone can post their personal cricket videos, video blogs and personal opinions. CricTV.com is a community network that is intended to motivate people to watch, share opinions, special moments and videos on cricket.

Online gaming
Soon, we are going to launch knibble.com, an online gaming site. I call it the Google of games. Knibble is for gamers of all ages and it's for free.
Internet, the new medium and the market
We also plan to create many more small niche verticals. Indian Internet advertising market is around 1.5 per cent of the total advertising market while in the US, the same is around 6 or 7 per cent, which is close to $100 billion. The future of the communication sector lies in Internet. Entrepreneurs should grab a pie of this segment and create new values and rules. I am very excited about the possibilities.