Hyderabad: Beginning as contractors who executed the Nagarjuna dam project in the 1960s, GVK group went on to make pre-laminated particle boards under the Novopan brand in the late 1970s. In the 1980s and 1990s it set up five- star hotels in Hyderabad and even ran a non-banking finance company. Today, it has emerged as a major infrastructure company, in charge of the Rs6,000 crore modernization of the Mumbai airport.
Gunapati Venkata Krishna Reddy, the 70-year-old chairman of the eponymous group, is now looking at bidding for 30 non-metro airport projects, entering the power transmission sector and exploring for oil and gas. GVK Power and Infrastructure Ltd, which had revenues of Rs429 crore last year, operates in power, roads, airports and other urban infrastructure sectors. In an interview with Mint, Reddy discussed plans for the group. Edited excerpts:
After winning the bid for modernizing Mumbai airport, what is your strategy for the sector since an estimated $9 billion (Rs35,460 crore) in investments will be spent on developing airports in the next seven years?
We have now become a strong player (in airports) and would like to compete for almost all airport projects in the country. We have gained a lot of experience and knowledge of this sector through developing the Mumbai International Airport. We now have a strong pool of consultants specializing in this field. We will also bid for international airport projects be it setting up new ones or modernizing an existing one. We have set up a separate division recently which is currently examining this.
Are you participating in the bid for Mumbai’s second airport, the Navi Mumbai Airport project?
In Navi Mumbai, we have the first right of refusal. It is going to come up for bids some time next year.
It is more advantageous for us since our special purpose vehicle, Mumbai International Airport Ltd, can bid for the Navi Mumbai airport project. Though we have to bid and have to compete with others, we will have additional advantage of 10% weightage points.
There have been some reports that you are in talks with Reliance Industries Ltd for developing the Navi Mumbai Airport. Any plans to offer a stake to Reliance?
We are not going to offer stakes to anybody. Even if we want to offer stakes to somebody, we cannot do so because we will lose the preference of first right of refusal and 10% weightage points once we join hands with others.
If we want to join hands with somebody such as Reliance Industries, then we will have to compete with others equally, losing the advantages we are currently eligible for as an existing airports developer.
The Airports Authority of India is considering development of 35 non-metro airports where the real estate component would be developed by private players. What are your plans?
We are bidding for both Udaipur and Amritsar airport modernization projects. We need not have any partners for qualification purpose here since we are already qualified on our own. We may take some partners for real estate development. We are going to bid for up to 30 of the 35 airports that are up for bids.
How do you plan to raise funds for all the projects?
Raising funds is not an issue. We have successfully achieved financial closure for our Mumbai airport project. Similarly, we think it is not going to be a problem in the case of other projects that we are going to take up.
The government has identified grid strengthening and augmentation requirements in power transmission for the next five years involving an investment of Rs71,000 crore. Are you interested?
We are keen on entering this segment of power transmission. We did participate in the first private transmission project that came up for competitive bidding. We will be bidding for the other 12 transmission projects as and when these are announced.
We are also very much interested in such a backward integration and we are waiting for the government to call for bids under the New Exploration Licensing Policy (for oil and gas exploration).
What is the status of power projects in the GVK portfolio?
The 600MW Govindwal Saheb project coming up at an investment of Rs2,900 crore in Punjab is expected to achieve financial closure in three-four months. The 370MW Goriganga Hydro Power Project coming up at an investment of Rs2,700 crore in Uttarakhand will take another year or so to achieve financial closure.
What about the issue of gas shortage for power projects ?
There is (gas) shortage for power in Andhra Pradesh. The government is asking us to go in for alternative fuels and start commissioning projects. Until natural gas supplies start from Reliance (in June), we will run our projects on alternative fuels such as naphtha and high-speed diesel. While the 220MW Jegurupadu-II will run on naphtha, 464MW Gautami will run on high-speed diesel.
What about ultra mega power projects?
We were initially not interested but are now keen on ultra mega power projects. We have bid for Tilaiya. And are bidding for a 1,820MW project in Punjab and a 1,200MW project at Amarawathi in Maharashtra.
What are your plans for the road sector?
We have started bidding aggressively for road projects. We have bid for Ganga Expressway, a 1,050km eight-lane expressway project starting from Greater Noida and ending at Balia in eastern Uttar Pradesh. The cost of the project is estimated to be about Rs30,000 crore. We have bid for this in consortium with Omaxe Ltd and Nagarjuna Construction Co. Ltd. We are also bidding for the Jaipur-Gurgaon highway, a 230km six-lane highway on NH 8 connecting Delhi and Mumbai. We are also interested in the 239km Surat-Dahisar highway on the National Highway 8.
What about realty and ports?
We are going to bid for the New Delhi railway station project, which has 220 acres of real estate right in the heart of the country’s capital. We are looking at opportunities in Andhra Pradesh and Tamil Nadu for acquiring lands and getting into real estate.