Column : When ambition overtakes ability
Shobhana Subramanian : Dec 10 2012, 01:34 IST
It was in early December 2007 that the GMR Infra stock hit its lifetime high of R134.35. Five years down the road, it commands a fraction of that value, at R17-18 apiece. The stock crashed last week after the Maldives government decided to annul an agreement that allowed a GMR-led consortium to run and renovate the Malé International Airport, and while the case is in the courts, it doesn’t look good for GMR. Unlike the Sabiha Gökçen International Airport in Turkey, and the Delhi International Airport Limited (DIAL) closer home, Malé was a profitable proposition. And airports, it must be added, bring in a big chunk of the revenues. The crunch in cash flows looks like it’s going to get worse.
GMR group chairman Grandhi Mallikarjuna Rao says the Maldives episode has been a learning experience. But the setback in Malé is a major one and only adds to the several other problems that GMR has been grappling with over the last couple of years. That story is best told through its performance on the bourses; after turning in negative returns in both 2010-11 and 2011-12, the GMR counter is threatening to do an encore this year too, having already lost 35%. Not the kind of track record one had expected when the group drew up a blueprint for straddling the infrastructure space in a country that is short on roads, ports, power and airports.
GMR may not be short on execution skills—witness the world-class airport in New Delhi—but the group’s
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