We don’t know of too many who have achieved so much, so quietly as Grandhi Mallikarjuna Rao of the GMR Group

Some 30 years ago, Grandhi Mallikarjuna Rao used to cycle 25km-30km a day in rural Andhra Pradesh collecting money for the rice, spices, jute or grains that he had supplied. Rao was a mechanical engineer, the first graduate in his family living in a village not far from Vishakapatnam. Today, Rao oversees assets worth Rs15,000 crore in power, roads and airports. Though Rao is extremely low profile, when you think of private initiative in Indian infrastructure, you have to think of GMR. Rao entered infrastructure by accident. Before that, he became a banker by accident. Once Rao enters a sector, he is methodical, focused and has global benchmarks. This has enabled him to be an unparalleled serial entrepreneur – trading, jute mills, ferro-alloys, banking, power, breweries, ear-buds, roads, airports... We don’t know of too many who have achieved so much, so quietly. Here are the excerpts from a conversation about his enterprise, vision and values

ML: Could you tell us something about your family and your childhood.

GMR: My family came from a small village called Rajam, 100km from Vishakapatnam (Vizag). We were in a trading family buying jute and grain from the farmers and selling it to the mills. We are four brothers and three sisters and nobody was really educated. I was the third son. I  had failed in my SSLC (secondary school leaving certificate) exam. I used to roam around with my friends, sometimes cycling 50km to the nearest town called Vizianagaram to see movies. Nobody really bothered about what we did, unlike today, where my daughters-in-law are completely focused on their children’s activities. Anyway, I wanted to reappear for my SSLC but there wasn’t much encouragement. The examination fee used to be Rs50. It was only after much persuasion that I could appear again. From that day, my life took a turn. I began to study and, eventually, stood first in the school.

ML: What is it that brought about this change in you?

GMR: Well, one reason was that I used to be completely influenced by my friends. Since all of them failed and I was appearing alone, I began to study and put in a serious effort. I not only stood first in my SSLC, but even when I went to college for my PUC (Pre-University Certificate) at Bobbili, I stood first in college. Then I got into engineering college. Those days, there were only four or five engineering colleges in Andhra Pradesh (AP). I went to study mechanical engineering at Vishakapatanam. I used to be a student leader in the college which had around 2,000 students.

I was the first graduate in the family, passing out in 1972. Within one month of my graduation, my father divided the family assets - each of us got Rs3 lakh and a house. My father wanted me to look for a job, but my mother wanted us to do business - I wasn’t sure what business we could do with Rs3 lakh. Eventually, we four brothers got together and got back into trading.

Even then, my father wanted me to take up a job, so I joined AP Paper Mills at Rajahmundhry as a shift engineer. I soon left that and joined the Public Works Department as a junior engineer for a few months. My mother kept insisting that I must do business. I finally left the job and joined the trading business with my brothers. We used to buy gingelly seeds and black gram and sell it at Chennai, Nagpur and other places. That gave me a rich experience -- collecting money and dealing with bad debts used to be a challenge. I used to travel and stay in small hotels. Sometimes, I travelled 25-30km a day by cycle to collect money. Earlier, we used to supply to really small traders, but I made contact with bigger brokers in Chennai and began to supply to them.

After a while, my brothers said why don’t we start some small industry? Those were the days of the licence raj and it was very difficult to get a licence. I got to know that someone was selling a jute mill licence in Chennai and the factory was closed. I purchased the licence and machinery and shifted the plant. This was a tremendous job. We didn’t have any contacts. I struggled for six-eight months to get all the permissions from the state government and also the Jute Commissioner at Kolkata. Finally, we got all the permissions and set up the factory as a small-scale industry for around Rs40 lakh.

ML: Why did you shift the jute mill to the village, which was in the interiors?

GMR: Raw material was easily available. There was also a good demand for twine and people were willing to pay in advance for it. We didn’t know bankers and it took over a year to get finance. Getting cement and steel for construction was also a long-drawn process because everything was in short-supply and we needed many permissions. Eventually, we started production in 1978.    I used to be very active in the village and that threatened the local politicians. They began to create problems between the workers and us.

ML: How many workers did you have?

GMR: There were 500 workers. One of the senior leaders was my junior in college. I never compromised. I used to look after my workers financially and didn’t give the union a chance to complain. However, I was strict about discipline. There was a strike but I refused to compromise and eventually resolved the problem. It taught me how to deal with politicians.

ML: What was the division of responsibility between you four brothers?

GMR: I used to look after the jute mill. We also had a transport business which one brother looked after. The eldest one was in trading and the last brother was in charge of a rice mill and an oil mill. After the trading business, we first started an oil mill, then the jute mill and, later, a steel rolling mill, then ferro-alloys. In the early 1980s, the government nationalised the transport business and we lost the three buses that we used to run. By then, we had acquired another jute mill and my second brother switched from the bus business to looking after the other jute mill.  The ferro-alloys business was 50km away at Tekali. It was managed by a friend of mine who resigned his bank job and came to look after it.

I then started making cotton ear-buds. I wanted to do something that was suited to our region. In fact, I wanted to start an export-oriented integrated textile mill. We tied up with BYC of Korea to make hosiery products. We had signed an MoU and the chairman had even visited our village. It was the first deal that they were planning with India. Mitsubishi was part of it and was in charge of supplying machinery and marketing. This was in 1990. India was on the verge of a foreign exchange crisis and even opening a letter of credit (LC) had to be approved by a foreign bank. So the project didn’t take off. But on my repeated trips to Korea, I hit upon the idea of a cotton ear-buds project. Johnson & Johnson was the only player in this business. I set up an export project in Chennai and we exported the ear-buds to various countries. I later sold the business. It was always my dream to start a sugar factory and a brewery. In fact, I used to apply for every licence available. I got the brewery and sugar licences at the same time. As it happened, just before I could start the brewery, the NT Rama Rao government came to power and introduced prohibition. I will come to that story later.

ML: Was this together with your brothers?

GMR: No. In 1987-88, we separated our businesses. My brothers felt that the cash accrued from other businesses should be divided and distributed rather than redeployed into newer businesses. However, my view was that it would be better to start new industries. By then, we had grown into several industries. My elder brother had started two more jute mills; we were also into plastic pipes, cycle rims and other small industries. We took just three or four days to separate our businesses. We shared a good relationship and that helped.

ML: How did you get into Vysya Bank?

GMR: In 1985-86, the Reserve Bank of India (RBI) brought in a policy that bank directors could have a maximum tenure of eight years. Vysya Bank, a small private bank in AP, had Rs60 lakh capital. Its previous directors had resigned under the RBI rule and new ones were being inducted. Ramesh Gelli was the Chairman and the bank operated mainly in Tamil Nadu, Andhra Pradesh and Karnataka. They were looking to expand in the costal belt of AP and Tamil Nadu. Andhra Bank was my banker in those days and Vysya Bank was looking for good people from the vysya community (trader community) with good connections in the costal area, which I had. At that time, they requested me to join the board. I accepted the directorship. It was a profitable bank, had 200 branches, paid a good dividend and was a listed entity.

In 1987-88, Vysya Bank made a 1:1 rights issue to meet RBI’s capital adequacy norms. Gelli requested all the directors to support the issue, but the Bank managed only a 50% subscription. I invested Rs5-6 lakh and requested all my friends to invest - my brothers and friends in my village and other family member invested Rs5,000 to Rs10,000 each. Other directors put in about Rs1 lakh each and, with great difficulty, the issue was fully subscribed. I even pledged my wife’s jewellery to support the issue. A year later, Vysya Bank made another rights issue. It was the same story again. I invested again and my shareholding went up to 12% and I became a major shareholder. I was still living in the village and only came to Bangalore for board meetings. But I took an active interest in the running of the Bank and was on various committees. When Ramesh moved to start Global Trust Bank (GTB) in 1994, there was a big vacuum at Vysya. There was a major management bandwidth problem and I was the biggest shareholder.

ML: What was your stake at that time?

GMR: My holding was 18%-20%; in fact, a major part of my wealth was in the Bank by then. There was also a lot of outside interest in acquiring private banks. Some directors wanted us to sell out. With great difficulty, I convinced my wife and we shifted to Bangalore. It is difficult to relocate after the age of 40, but I did it only for the Bank. Vysya Bank had started many associate companies and subsidiaries for leasing, housing, a travel agency and even a portfolio management club. They consumed a lot of management time and, worse, attracted negative publicity. Closing down each of these businesses was very difficult, especially the portfolio scheme. We discovered that there was no back-up software for many services and many investors had filed cases against the Bank.

We finally decided to focus on core banking. It was a big learning experience for me. I had to recruit nearly 200 people overnight, mainly from the public sector banks. I didn’t know anyone at RBI, since I came from a village. It used to take me two or three days even to get an appointment. People thought the Bank would collapse, but gradually I began to figure out how to create trust and credibility. I gave a 5% stake to Banque Brussels Lambert (BBL) -- a Belgian bank. This was to create confidence in Vysya Bank. I not only gave them a place on the board, but also a representation on every board committee. That helped us learn a lot.

ML: What about your other existing businesses?

GMR: I continued the other businesses with the help of my friends. I had planned to be with Vysya Bank only for a year and go back after the problems were resolved. But I realised that only half the problem was resolved. My son-in-law and one of my classmates joined me and we also began to explore other business opportunities in Bangalore. That is the time we made a public issue for the brewery, but prohibition was announced just as we were set to deploy the funds. I met Chandrababu Naidu on a flight just before the elections and he told me that when we come to power, we intend to introduce prohibition. We had to immediately change our plans. Just around then, the power sector opened up for private investment. We got the licence for an independent power project (IPP) at Chennai. I was trying to run the Bank and also the power project. It was a lot of hard work and even affected my health.

Then KR Ramamurthy joined us from Corporation Bank (as chairman & CEO) and after that my workload reduced. We introduced technology. There were a lot of other legacy issues as well, because of an asset-liability mismatch and a lack of systems and processes. There were some leasing deals and aggressive lending to builders during the scam of 1992, which began to show up only later. As India’s economy went into a slump, our non-performing assets (NPAs) touched a high 15.6%.  I created a separate committee and a team that was focused only on recovery headed by an executive director. I did nothing but recovery. We met every Saturday with the team to assess issues. If the borrower faced a genuine problem, we supported him, but we did not show mercy to wilful defaulters. Over two years, we reduced the NPAs to 4.5%. Most industrialists I knew were sitting on the other side of the table. That was another rich experience  and I learnt how banks are willing to support businesses in times of genuine difficulties, if the borrower is honest.

The next big development was that we got a licence to enter the life insurance business and BBL increased its stake from 5% to 10%. Then ING purchased BBL internationally. ING wanted to raise its stake in Vysya to 20% in that business and we agreed. We started the life insurance business but not mutual funds.

Let me complete the banking story. We had brought in several top bankers such as K Balasubramaniam, former country head of American Express in India. He and others helped us make a lot of changes. Then ING offered a very good price for our stake and I decided to sell out. I continued as non-executive chairman for a while but I resigned eight months ago because even the non-executive position has a lot of time commitments. ING, however, wanted me to continue as chairman emeritus. We sold the life insurance business to Rajan Raheja.

That is when we began a process of consolidation. On the infrastructure side, the power project was successfully implemented at Chennai. My eldest son had returned and the younger one had gone to Singapore. Meanwhile, we bagged a licence for a barge-mounted project in Mangalore (the Tannir Bavi project), Karnataka. Thirty-six licences were given out. A Malaysian company and a Chicago-based company had got four barge-boat licences but were not able to implement them, because the Malaysian economy was in trouble. We purchased the licences from them and implemented the project. Building the floating power project was another learning experience. We faced a lot of litigation and learnt to deal with it while ensuring successful implementation. We commisioned the project in exactly nine months.

ML: But you had a power project in Chennai as well.

GMR: At Chennai, I had an American partner, CMS Energy, who had a 49% stake. In Tannir Bavi (Mangalore), I had a 26% stake and the rest was owned by our American partner PSEG (Public Service Enterprises Group), because I didn’t have much funds. Around that time, we set up a BPO.  Within seven or eight months, we got a very good price and sold our stake to I-Gate. Somehow information technology (IT) is a different game and difficult to understand.

ML: You have set up businesses from jute mills to power projects. What is the common strategy or approach in all your diverse businesses?

GMR: I trust my people. Also, in my whole life, every time we entered a field, we have tried to set a new benchmark. Due to my banking experience, I used to meet a lot of people. One of them was SV Venkatesan of the Essar group who I had given a ‘white knight’ shareholding of 5%-6%, which I subsequently bought back. When I was getting into the power sector, he gave me some good advice. He said, “Don’t get into construction. Focus on completing the project on schedule and always pay your bankers one day before it is due. If you do that, bankers will give you a lot of support”. That is the principle I have followed. So I gave the complete EPC (engineering, procurement and construction) contract to Hyundai Heavy Industries. Simultaneously, we supported them because they were new here. The project was completed a month ahead of schedule.

We used to avoid fights with the state government, so we created a team that was completely focused on resolving issues. For instance, in Chennai, which has water shortage, we invested in a water purification plant using German technology that cleaned the sewage water to the level of drinking water and used this for cooling the plant. We also used a two-stroke diesel engine, when most of the engines used in India are four-stroke (which are cheaper but have higher maintenance cost and fuel consumption). Although the state government did not specify this, I decided that the project is a national asset. The engine should last and we must have the best technology. Bankers didn’t know about the technology, so I brought a whole team from Germany to make a presentation to establish its efficacy. Today, our plant is in the eighth year of operation and is working efficiently.  We had the same approach to the Tannir Bavi power project, which is naphtha-based.

It is not as though there are no challenges. But we try and work around them to arrive at compatible solutions with the state government. We created a focused team and worked together with the state government and the power board, so that we create a win-win situation for all.

ML: Infrastructure projects are messy and you were doing several projects simultaneously. How did you hire people to handle all the problems skilfully?

GMR: We are always looking for people who have good leadership qualities and fit into our values, systems and culture. I have also been keen on setting up good systems. For example, we have divided each business into operational assets and business development. That helps us to stay focused. On the issue of people and leadership, we entered the power project in an interesting way. One of my classmates was a marine engineer who was working in the power sector. He had set up a 50MW power plant for Ferro Alloys Corporation.

At that time, we had raised Rs18 crore to start a brewery but prohibition in AP had stalled our plans. We were looking for a new options and hit upon the idea of starting a power project and I got my friend to join me. In that sense, our move into the infrastructure sector was accidental. But within a short time, we set up three power plants in a very focused manner.

ML: Why did you sell your Vysya Bank stake after all the hard work to revive and clean up the Bank? Most Indian businessmen do not sell what they have built.

GMR: It was an emotional decision and a lot of debate went into it. Even today, I am emotionally attached to it. At times, it was even more so; if anyone criticised Vysya Bank, I took it personally. But my son said that banking is a difficult business because to grow you have to constantly bring in more capital. Where would I bring so much capital from and what would be the return on it? My sons also pointed out that globally banking is not a family-run business. So after a lot of debate and discussion within the family, we made a decision.

Another factor also helped. By then the Enron problem had surfaced and IPPs were all in trouble. CMS Energy closed down their Singapore operations and PSEG closed their Asia operations. Both offered me their stakes at an attractive price. So the two things happened simultaneously. The two foreign partners in the power project were persuading me to buy them out and I had the option of raising good money by selling my Vysya Bank stake. But it wasn’t easy. My wife didn’t want me to sell but Ramamurthy and Balasubramaniam (Bala) also explained why it made sense to sell. We only decided after eight months of considerable debate. ING also convinced me that I would remain non-executive chairman.

ML: So the next big leap was airport infrastructure?

GMR: No, it was roads. That was the time that the roads annuity scheme had started. For the first time, National Highway Authority of India  (NHAI) had identified six roads which would have to be built and financed by the private sector. In the first phase, three roads were offered and we bid for all three. It was a BOT (build, operate, transfer) annuity model. NHAI would pay an annuity for 15 years. We went into it very aggressively. Our group emerged as the lowest bidder for all three and the difference between us and the next was huge.

ML: What was your advantage?

GMR: We focused on financial returns. Maybe the others wanted to earn returns on project cost and construction. I don’t know their calculations. Now, NHAI was faced with a huge dilemma about the difference in rentals that we quoted. They did not want a miscalculation anywhere that could derail the privatisation initiative, since this was the first such experiment. Many people started a whisper campaign against us and our ‘lower’ bid, since we were doing it for the first time. NHAI took months to decide. I went and explained to NHAI that we had built two power plants with  an outlay of Rs2,000 crore. The barge-mounted one was particularly difficult. I said: “I am investing my money in the road projects; I am offering a bank guarantee and, in any case, you can always throw me out if you want to”. NHAI agreed. For four new projects, they called for fresh tenders. Everyone quoted 5% below our bid! We had created a benchmark. I completed both the projects before time, visiting the site every week, went for securitisation and also availed of early completion bonus and made good money. Almost Rs400 crore has come and it was a very good beginning. After that, we won four road projects -- one annuity-based and three on rental basis.

ML: For your power project, your friend had helped you with initial knowledge of implementation.  Who piloted the road project for you?

GVR: We have a group executive council, which consists of all sector heads. Bala, my two sons (Kiran Kumar and GBS Raju), my son-in-law (Srinivas Bommidala) and my classmate BVN Rao. We meet every Saturday at Bangalore (whoever is not in the city participates through a videoconference) and decide our course of action.

ML: What was the next move in infrastructure?

GMR: I always felt that I had not set up anything in my own state and wanted to do something there. I had sugar factories and other businesses, but I wanted a large project of over Rs1,000 crore. Then, in 1999, the AP Government called for a global tender to set up a greenfield international airport. We decided to bid for it and tied up with the Malaysian Airport Authority for that bid. The criterion of selection was based on which bidder sought the least grant. The airport would have to cater to five million passengers. While 26 entities showed interest, there were only three final bids. Our bid was the most competitive and we got the project. I knew that Chandrababu Naidu had a passion for international quality. But here again, there was a long delay after we won the bid and I got to know that government had apprehensions about whether we could deliver international quality. But they wouldn’t say so openly. I went and explained that I had built two world-class power plants and suggested that they could send a team to see them. The Principal Secretary himself saw the projects and the team was convinced. But they put in another condition that the Malaysian Airport Authority must bring in some equity; that was not part of the original condition. At that time, Malaysia had gone through an unhappy experience in India and was against the investment. Again, we went to Malaysia and convinced them that we are different. We had built other projects and would make a success of this one too. Then they agreed to invest US$10 million. There were further negotiations and, finally, in 2003, we signed the shareholders’ agreement.

Once we decide to do something, we get into it with complete focus and start on the assumption that we don’t know anything. Everybody in the project team, including me, goes through a learning process. Since airports were new to us, we got the best people in the world to talk to us. We went to the International School of Business, Hyderabad. We also had a two-day seminar by Prof Rigas Doganis from Cranfield University -- an international expert to explain all the details of airport infrastructure and their role in the country’s economy. We visited all the major airports in the world. We wanted to build a world-class airport; after all, it is a national asset and creates the first impression about the country. We appointed Bruce Benjamin, who built the Hong Kong airport as a project head, COWI of Denmark and Aviaplan of Norway for engineering and master plan preparations. We have given out construction contracts to the best people in the world. The runway was given to L&T and the terminal building to China State, which built the Hong Kong airport.

Around that time, the government started deliberating on the modernisation of Delhi and Mumbai airports. The process began in 2003. We put together a team that began to study airports right then. We used 15 international consultants to bid for the Delhi and Mumbai airports. We spent over Rs34 crore on the bidding process itself. We knew that it is a lifetime opportunity and we wanted to do our best. That gave us an advantage when the current government revived the modernisation plan. That is why we were the only one among the six bidders who qualified for both the airports. The selection norms were very stringent. There were 100 marks for management capability and development capability; and one needed  more than 80 marks to qualify. These marks were again broken up over specific capabilities. We used to follow this very carefully and worked on strengthening all areas where we were weak.

In 1995-96, we started the process of consolidation. I sold off my brewery and got a very good price for it. I always believe that if you build something world-class, you don’t need to worry about it. I sold the brewery to Vijay Mallya. He is very proud of it and is implementing some of my systems in other breweries. We managed the brewery for one year but later had given it to Shaw Wallace on lease. Later, we decided to get out of liquor and IT. We have decided to give out the jute business on long-term lease; we sold the cotton ear-buds business. We were also into timber exports. We sold that as well.  

ML: Did the council take all these decisions?

GMR: Yes, it was part of our consolidation exercise. We have decided to stick to agriculture and infrastructure, since these sectors are important for the country’s economy. The agri-business is still small but it is close to my heart, since I come from a village. We are in sugar with 5,000 tonnes of crushing capacity. We want to go for 25,000 tonnes. We are building one plant near Hubli and have identified two or three locations in Karnataka. In infrastructure, we will be in power, roads and airports.

In the power sector, we will be in hydro, pithead thermal projects, nuclear and transmission infrastructure. In hydel power, we already have on hand a 140MW plant at Badrinath in Uttaranchal and a 160MW project at Arunachal. We have also bid for two hydel projects in Nepal and a decision is expected any time.

We have a 1,050MW thermal project in Orissa. We have a good team for transmission and have already created a team to pitch for nuclear projects whenever it opens up.

We will also bid for viable global projects.

In roads, we have 453km under management, of which 140km are already operating and, by next year, all the projects will be in operation. In airports, we are looking at related business. We are setting up an MRO (maintenance, repair and operations) facility with LufthansaTech for aircraft checks. Today, most airlines go abroad for their advance aviation checks. We have 5,400 acres around Hyderabad airport, with a 26km boundary. Within this, we want to develop an aerotropolis by building a city within. This will include business centres, exhibition centres, convention centres, residential complexes, a 300-room hotel and a golf course and a 250-acre SEZ.  

In every business, we want to emulate international models. For instance, at the Hyderabad airport, we have an open access fuel system that will allow all airlines to choose their fuel supplier. Similarly, for the airport hotel, we have brought in Novotel of the Accor Group of hotels who are among the best in the world. Even cargo, baggage and ground handling will be mechanised and handled by an international company. This will fetch better efficiency and will also be cost effective for the airlines.

ML: We understand that, like your father, you have also decided succession in detail.  

GMR: Actually, like my father, I too was planning to divide all the assets among my children by creating three units. Fortunately, I attended a conference and listened to MV Subbaiah of the Murugappa group on family succession. It was an eye opener for me and I discovered that there were family businesses that have existed for over 300 years. When I heard that, I put together a team, which included senior bankers, HR consultants, etc., to write a family constitution. We have a separate family office as well. Subbaiah told me, “Don’t be in a hurry to write it -- it is not as easy as writing a Memorandum of Understanding -- everybody has to agree and be committed to it”. It took us nearly 570 hours to work on it over a four-year period. Then Bala suggested the name of Peter Leach of UK.  His firm has been working with leading business families for the last 130 years. Leach has been working with us for two years now.

ML: What are the key elements of the constitution?

GMR: The constitution lays down the selection of my successor. I don’t nominate my successor. He will be selected by the next generation. It also spells out a system of good family governance, conflict resolution and valuation of the business. The process of inducting new family members into the business, including their level of induction and qualifications required is addressed; if some members do not want to enter the business, the required provisions are dealt with. It also articulates the family values. All the ladies in my family -- my wife, daughters and daughters-in-law -- are experts on what is on each page of the constitution. That is important because otherwise they will not own and commit themselves to the constitution.

ML: All your skills - entrepreneurship, judgement about people and drive - how will that be carried forward to the next generation?

GMR: Four years ago, we had a conference in Goa, where we debated the future of the family. We identified seven business values that are important to us and also a set of family values. The challenge was how to infuse them into the way we do business. It includes entrepreneurship, humility, delivering on promises, teamwork and relationships, social responsibility, respect for individuals and learning. It is a big challenge for me as well as our group to imbibe and internalise these values. Even in our corporate performance appraisals, weightage is given to values. I believe that once the values are intact, the same entrepreneurship will continue and sustain the group.  

ML: What is the next challenge in your life. After all, you have even decided on succession.

GMR: (Laughs) I have been told that if the founder decides the succession, then things have a better chance of working out. Living within a constitution is not easy -- after all, we are human beings and I am bound to differ even with my sons; each one thinks differently. So every two months, we  sit down and discuss things. We have a family business board, a non-business board for the ladies, a separate spiritual counsellor and an independent family office. A small difference can fester and blow up into a bigger issue. It is better to sit down and clarify matters in time. We take the same salary and perks. We have even decided what car each one can have. So, if someone wants a better car, he cuts back somewhere else. For me personally, the big challenge is to create a good institution. We acknowledge that there are differences but we want to learn how to manage them. We have grown in assets but compared to other large groups, we are only beginning. It is important for us to have good systems and processes. We are putting in place a good IT infrastructure and have started several HR initiatives. I don’t want to be the biggest in the world, but I want to set up a good organisation.

ML: You set up a Foundation for social initiatives before CSR became fashinable. How is that working?

GMR: About 10 years ago, we set up a Foundation called the GMR Varalakshmi Foundation. Fifteen years ago, when I started my jute mill, I used to do a little bit for the people around, but 10 years ago, we set up an engineering college for the rural folks. Between 3%-5% of the group’s profit goes to the Foundation, which is a Section 25 company (not-for-profit). It focuses on only four areas -- education, health & hygiene, empowerment and community development. Its aim is to reach out to the poorest people around the location of our factories.

In education, we have set up primary schools, identifying bright people and sending them to vocational courses. We have balwadis, pre-primary schools and primary schools. We are even supporting government schools and and have schemes for school dropouts and another for gifted children. We take care of these children like our own and give them all the facilities to study anything they like.

We have mobile health care units & ambulances and we also conduct health camps. We have built toilets in our village, which are like five-star toilets. It is easy to build toilets, but difficult to maintain them. We are doing the same at Hyderabad as well. Our empowerment focus is to train people in a variety of vocational courses for men and women -- this includes spiritual training. Our community development effort is headed by V Raghunathan, who was a professor at IIM Ahmedabad and later president at ING Vysya Bank. He is working with passion at rehabilitating people from backward communities, offering them the right education and vocational training and create self-help groups to help them earn a livelihood.