Rao: Binding force

Mumbai, April 22: The Hyderabad-based GMR group has put in place a “family constitution” that prevents companies in its fold to be carved up even if there are differences within the family.

Grandhi Mallikarjun Rao, the founder chairman of the group, has two sons — G.B.S. Raju and Kiran Kumar. While younger son Kumar is in charge of the Hyderabad international airport project, Raju is the group chief financial officer and also looks after strategic and corporate planning.

Another key member of the group management team is son-in-law Srinivas Bommidala, a former Coca-Cola bottler, who assists Raju in overseeing and managing the development of the Delhi international airport.

Officials said the group has finalised a family constitution that lays down the principles, processes and policies on all family and business matters. The constitution has been drafted by a UK-based specialist.

“It gives a signal to investors that the company will go on and on, irrespective of what happens in the family. If there are some serious differences, the constitution says family members won’t be able to split the company. Only economic benefits will accrue to family members,” the officials added without elaborating on the economic benefits.

This constitution is believed to have been finalised in the presence of the key employees of the group early last month.

Funding plans

GMR Infrastructure plans to raise Rs 3,000 crore by sub-leasing up to 50 acres adjoining the Delhi airport to real estate developers and hoteliers.

In January last year, a consortium led by GMR was awarded the contract to operate, manage and develop the Delhi airport. Real estate development is an important part of the project and GMR has the rights to commercially develop close to 250 acres near the airport. However, the land has to be utilised for aviation-related activities only.

According to Madhu Terdal, group CFO, strategic finance, the company can realise up to Rs 3,000 crore through securitisation of 25-50 acres. Terdal added that roadshows for this purpose were likely to begin shortly. The group expects international firms from the US and Europe to show interest in developing the property.