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Presented By :

Sai Charan A
Indrajeet
Sriharsha
Swetha
Phaneendra

Disclaimer
An example of microproject presentation for Strategic Management of
Technology course under guidance of Professor K. S. Momaya.
Microprojects are undertaken in the unique course at IIT Bombays SJM
School of Management (SJMSOM) for learning and class room discussion
purpose and not to criticize the process of managerial decisionmaking
or actual decisions at the company. They must not be used as source of
secondary data without written permission of the
guide at momaya@iitb.ac.in
Miniproject copyright by IIT Bombay, 2015

Key Objectives

Objectives & Root Cause


Analysis

Root Cause
Analysis

Due to the increase in the prices of raw


materials & stiff competition among the
contenders,
most
of
the
construction
companies were not able to generate expected
revenue over the past five years

Root Cause Analysis

Critical Success Factors


-- Product Differentiation
-Technology Innovation
-- Organizational Innovation
Benchmarking GMR with leading industry
players on
-- Financial Capabilities
-- Market Share
-- Technologies Used
-- Strategies
Employed

Instead they are operating on a no-profit no-loss


basis
Along with these uncertainties in the industry,
there was an increase in overall estimated cost
by 47% during the construction of the Indira
Gandhi International Airport which led to a debt
of Rs 15,000 crore for GMR Infra and is
currently operating with a consolidated gross
debt of Rs 45,800 crores
The analysis would therefore concentrate on
the reasons that led to the poor performance of
the company despite the huge success of its
Delhi and Hyderabad airports

Motivation behind selecting


GMR

The construction industry is the second largest industry of the country after agriculture. It makes a significant
contribution to the national economy and provides employment to large number of people
GMR Group has a wide presence, impact and scope that extends from national to the global, supporting
livelihoods to enhancing the quality of life & plugging infrastructure gaps to create benchmark assets

Evolution of GMR

2012-13
2010-11

GMR Group
won the
2009
Won the
Award for
expansion
and
Most
2007-08
management
Wins 181 kms
Admired
contract
from
long
Infrastructur
2003-06
the Male
The
Hyderabad
e Company
international First Unit of
-Vijaywada
Company
1996-2000
Won the bid
airport, the
stretch & it's
has split its
GMR's
to develop
Maldives
7th
Highway
face
value
Warora Plant
Established &
and operate
Project
from
Rs10/
MOU
with
the
Synchronized
Incorporated as the
to
Rs2/Schulich

Acquires
a public listed
Announces
greenfield
Signs MOU
School of
Indonesian
company in
Successful
international
for 300 MW
Business of
coal firm for
1996 as
Conclusion
airport at
Upper
York
Rs 400 cr
Varalakshmi
Of Sale Of
Shamshabad
Karnali Hydro
University to
GMR Group
Vasavi Power
GMR Energy
in Hyderabad
Electric
develop
the
acquires
Projects Limited in
(Singapore)
Project, in
learning
100%
In 1999, the
Pvt Ltd.
GHIAL
Nepal
environment
ownership of
name changed
awards In Bought 50%
& academic
Island Power
to GMR Vasavi
flight
stake
in
US
infrastructure
Project,
Infrastructure
Catering
power
co
Singapore
GMR
Finance Limited Contracts
Intergen
In 2000, the
Infrastructure
Company
Enters a JV

GMR
Infraawarded the
name of the
splits its Face
with AAI &
DIAL ties up
first Mega
Company was
value of
Fraport to
with
Highway
GMR
Shares from

2014Present
GMR
Infrastructur
e wins first
railway
project
Signs MoU
with Japan
Bank for
International
Cooperation
GMR Group
Signs PDA
with
Government
of Nepal for
900 MW
Upper
Karnali Hydro
Power Project
Was declared
the winner of
"The Best
CSR
Practices
Award-2014
" for
undertaking
exemplary

Problem Structure & Key SMOT


Issues
GMR,Problem
one of the leading
airport
infrastructure
Structure
developers, has also faced a
tough time due to its airport
business which contributed
to around 42% of its
revenue
Despite winning
international awards for its
Delhi and Hyderabad
airports, the company was
unable to reach its
anticipated financial goals
The scope of the project is
to identify the effects of
changing regulations,
economic conditions on the
business of developing
airports in India, the airport
business of GMR and its
specific challenges
compared to global leaders
in the industry.

Key SMOT
Questions
Capacity Utilization

What are the reasons that led to the dip in the performance
of GMR Infra

Identify challenges involved in developing a world-class


infrastructure project in developing countries

Expansion/Setup
Cost
How its competitors are handling these challenging
environments both nationally and globally
Product Portfolio

What measures are to be taken to overcome these challenges


and increase the market presence of the company

How GMR Infra can use technology as a tool to the leader in


Indian construction industry

Key Technologies used by GMR

Terrestrial
Lidar

GMR uses the state-ofthe-art Terrestrial LiDAR


technology and in-house
developed algorithms and
workflows for collecting
rapid and accurate 3D
point cloud data

It offers both short and


long range terrestrial
laser scanning services
from data acquisition to
final deliverables

Terrestrial LiDAR
promises to provide a rich
data product, which
measures more
information even in
inaccessible areas.
Source:

Technologies Used
contd

Baggage Handling System


The Common User Passenger Processing
System (CUPPS) in-line baggage handling
system provides five levels of checking,
including integrated X-ray and CTX
scanners. The baggage reclaim area
features 14 belts with two belts for outof-gauge (OOG) bags. This can handle
12,800 bags an hour

Automated people movers


(APMs)
APMs include Travellators,
escalators, elevators and inclined
walkways
Travellatoris a slow moving conveyor
mechanism that transports people across
a horizontal or inclined plane over a
short to medium distance
AnEscalatoris a moving staircase
a conveyor transport device for
carrying people between floors of a
building
Anelevator(liftin British
English) is a type of vertical
transport equipment that moves
people or goods between floors

Critical Success Factors of GMR


Process Innovation:
Over 168 counter in the check-in area to
Organizational Innovation:
Strategic partnership with Wipro.,
speed up check-in and security
First of its kind JV focused on
clearances unobtrusively
emerging business models and
More than 95 desks for fast and smooth
technologies for airports
immigration procedures
DIAL entered into Operations,
Two tier terminal building - departure
Management and Development
complex on the upper level and the
Agreement (OMDA) with the AAI
arrivals at the lower level
Strategy of Asset Light and
Access to the aircraft from the terminal
Asset Right model to shore up its
is provided by 4 piers
revenues and improve business
RGIA- first Indian airport to have the
Airport Operations Control Centre, the
nerve centre for all coordination within
the airport
Technologi

Product Innovation:

cal
Innovation

Advanced 5 level in-line baggage handling


system with explosives detection technology
for greater efficiency and security
Terminal 3 has state-of-the-art complex
featuring CUTE
Airport also incorporates modern IT
systems like Flight Information Display
Screens, Baggage Handling System (BHS)
and uses Airport Operational Database
(AODB) technology for the first time in India
Third runway is amongst the longest in Asia
with capacity to handle an A380-size aircraft

Sources: www. www.gmrgroup.in, moneycontrol.com,

Operating profit margin ( in %)


50
40
30
20
10
0
-10

2010 2011 2012 2013 2014


GMR

2500
2000
1500
1000
500
0
2014
-500
-1000

GMR
2013

2012

2011

2010

Reliance Infra
Lanco
Infratech

-1500

GMR profit has increased from the last


two years due to its Asset light and Asset

Global Presence Benchmarking


1000
800
600

ROG-Revenue
earnings in forex (%)

400

ROG-Revenue
expenses in forex (%)

200
0
2011
-200

Group has infrastructure operating assets and


projects in several countries including Turkey, South
Africa, Indonesia, Singapore, the Maldives and the
Philippines
40% share in
MICA
-Philippines

30% stake in
Golden
Energy Coal
MinesIndonesia

70% equity
share in
Hydro
projectNepal

2012

2013

2014

GMR Infrastructure in partnership with Megawide


Construction Corporation of Philippines emerged as the
highest bidder for Mactan Cebu International Airport (MCIA)
It is the second busiest airport in the Philippines
GMR-Megawide consortium is now in the race with five
others to acquire management operations for five other
airports in the Philippines

Country

Competitor

Philippines

JG Summit

Turkey

Fraport, TAV

Maldives

GVK, TAV

Malaysia

Mak-Yol Construction

Sources: www. www.gmrgroup.in, www.dnaindia.com, timesofindia.cindiatimes.om

Market Position of GMR


Market Capitalization: INR 60.69 Bn (as on 28th August,2015)
Constructed and now operating DIAL, Rajeev Gandhi airport,
Hyderabad and
Cebu airport

Net Sales of all the companies are


decreasing after 2012, whereas GMR has
performed well in 2013, but it sales decreased
in 2014. But in 2015, Sales are up by 9%
resulted in operating profit up by 37% to Rs
862.60 crore

Operating power plants of 2500 MW capacity


Projects of 6000 MW capacity under development stages
Operating solar and wind power projects of 30 MW capacity

The EBITDA of Airport business was higher by


32% (to Rs 544 crore) spurred by higher sales
as well as 380 bps improvement in EBITDA
margin. The EBIT of airport business was up by
98% to Rs 403.75 crore.

7 Highway projects measuring 2851 Km


14300 Acre Special investment region development
GMR Infrastructure, the leading infrastructure developer
has registered 9% growth in its consolidated revenue for
the quarter ended June 2015 to Rs 2966.01 crore
Upside in revenue is largely on account of higher revenue
from airport and roads even while that of power stay flat.
Segment revenue of airport was up by 18% to Rs
1520.29 crore (or 49% of sales up from 45% in Q1FY15)
aided by traffic growth in both HIAL & DIAL as well as
higher non aeronautical revenues.

Rate of Growth of sales has been decreasing


for GMR and in 2014 it showed a negative
growth,
but itRevenue
performed better
than its
GMR
Growth
competitor Lanco
1600
1400
1200
1000
800
600
400
200
0
-200

Sources: www.capitalline.com

2010

2011

2012

2013

2014

Financial
Benchmarking
Revenues in last five years ( in Cr. Rs.)

Profit in last five years ( in Crore Rs.)

60000

2,000.00

50000

1,500.00

40000

1,000.00

30000
500.00

20000

0.00

10000

2013

2012

2011

2010

-500.00

-2000
2014

2014

2014

2013

2012

GMR

Reliance infra

HCC

L&T

2011

2010

Lanco infratech

In 2012 GMR as well as its most of the competitors


got maximum revenue
Overall industry is facing problem in getting revenues
from operating projects
However GMR is growing overall in terms of revenue
Demand for construction has been sluggish in 2013,
with industry growth estimated at 1.6% over the
previous year
Companies are facing problem with debts and
difficulties in getting loans from banks

-1,000.00

GMR

Reliance infra

GMR is profitable in all these years

After 2012 profit is decreasing for all


including GMR but GMR has managed to
increase profits in 2013-14

Till 2012 profitability of industry increased


due to growth in construction but after that
decline in demand and loan payments
decreased profits

Sorces:http://www.ey.com/Publication/vwLUAssets/EY-making-india-brick-by-brick/$FILE/EY-making-india-brick-by-brick.pdf,
www.moneycontrol.com, www.capitalline.com,

Financial
Benchmarking
Revenue earning in Forex ( in Cr. Rs.)

600
500

30

300

20

200

10

100

50
40

400

Operating profit margin ( in %)

0
2010

2011

2012

2013

GMR

Reliance infra

Lanco infratech

HCC

2014

2010

2011

-10

GMR is earning more in Forex than its competitors


and the amount is increasing over the years
In this segment L&T has highest earnings in Forex
GMR is also well performing outside India

GMR

2012

2013

2014

Reliance infra

GMRs operating margin is highest of all


competitors
It managed to operate at higher margin even
every other companies margins reduced
Its operating margin reduced then agin
increased due to better project management
and operating

R&D Expenditure as a % of sales

Reliance infra
L&T

2010

2011

2012

2013

2014

0.14

0.13

0.12

0.05

0.15

0.25

0.25

0.25

0.25

0.3

Sorces:www.moneycontrol.com, www.capitalline.com

Indian infrastructure companies dont focus much o


R& D ,major reason being uncertainty in project
viability and ecosystem
Reliance infra and L&T spend some money on R&D
GMR doesnt spend significantly as of now

Financial
Benchmarking
Indexed Share Price

250.00

200.00

150.00

100.00

50.00

0.00

GMR
Punj Lloyd

HCC
GVK Infra

Reliance Infra
Gammon India

Lanco Infratech
BSE SENSEX

Financial
Benchmarking
20.00

TRS(%) vs MVA/IC

Indexed Monthly Prices


400.00

15.00

350.00

11.57
10.00

4.89

300.00
250.00

5.00

MVA/IC

200.00
0.00

-1.00

-0.50

-4.55

-3.49
0.00-5.00
0.50
-7.370
-10.00

-13.819

150.00

-3.85
1.00

1.50

100.00
50.00

-11.26

0.00

-15.00

GMR Infra

-20.00

'BSE_SENSEX'

TRS (%)

Relian Lanc
ce
o
Punj GVK Gammo Averag

GMR HCC Infra Infra Llyod infra n India


e
11.5
Total Return for 11.2
-4.55
13.81 -7.370 4.89
-3.49
7
3.85
Shareholders (%)
6
9
Market Value
Added/Invested 1.00 0.37 -0.11 0.86 -0.31 0.37 -0.411 0.25
Capital

Quadrant 1
HCC
Lanco Infra

Interpretation
Quadrant 2 Quadrant 3
Reliance
Gammon
Infra
India Ltd.
Punj Llyod

Recovering
Star
NonUnderperfor
performers
performers
mers

Quadrant 4
GMR
GVK Infra
Past star
performer

These two tables show that GMR has been


past star performer but facing intense
competition and problem in paying and
getting debts from banks

GMR Infra

Technology
BenchmarkingReliance Infrastructure

GMRs core competency is deploying technology and


managing project

Focus is on cost and energy efficiency, Delhi


international airport operated by GMR is worlds first
airport to get ISO 50001:2011 certification for
energy management

Reliance Infrastructures core competency is


deploying technology and managing project
however it has strength in other areas

It focused on metro rail projects, Mumbai metro and


Delhi airport metro express where GMR has no
presence

GMR led consortium has obtained contact for 417


km-long eastern dedicated freight corridor railway
project which is estimated to cost Rs 5,080 crore.

In is constructing a worlds largest gas-fired thermal


power plant (5600MW ) in UP

GMR is now focusing on acquiring new technology


like LiDAR and also planning to purchase automatic
track relaying machine

R-infra has strong competence in power generation


( 941MW operating) and highway construction
( building 1000 KM roads ,project worth $ 1.8Bn)

It expanded into energy sector in both traditional


sources as well as renewable sources such as solar
and wind energy and operating power plants of 2500
MW capacity

R-infra is planning to venture into defence warfare


manufacturing
through
Joint
Ventures
with
technology
partners,
currently
focusing
on
submarine, project worth 6000 crore.

Vinci Construction

Vinci construction has 21 patents while GMR has none and R-infra
has only one
Vincis focus area is toll road, dams, canals , mostly civil
construction
It has high technology machinery and it has patented processes and
products to smoothen construction work
Strong presence in Europe and expanding in North America
Ventured into India but left due to problems in getting projects and
a lot of hassles

Sources: www.forbes.com/sites/ramcharan/2013/03/19/is-your-core-competence-still-relevant, articles.economictimes.indiatimes.com/2015-0406/news/60866131_1, www.gmrgroup.in, en.wikipedia.org/wiki/Reliance_Infrastructure, www.rinfra.com,


www.vinci.com,

Strategy Diamond

GMR infra is making alliances


with foreign companies for
domain expertise and technical
collaboration
In power generation sector it is
working on 6000MW of projects
in India and Nepal
GMR has entered into wind power
generation with projects of 4MW
capacity in India
GMR has bagged contract for
eastern dedicated freight corridor
project

Arena

Staging Economic
Logic

Vehicles

Its core competency is to build


expertise quickly in its venturing
sectors and completion of project
Portfolio of scalable projects
Focusing on efficiency, DIAL is
first airport to obtain ISO
50001:2011 certification for
energy management
GMR should focus on patenting
process improvement so as to
compete with companies like Rinfra, L&T and to enter into other
countries

Differentiator

Getting more project through EPC


Acquiring companies to build
competence in sectors it is
venturing into
Invest in R&D to move ahead in
power generation especially
renewable energy segment

GMR is early mover in Airport


constructions and operation in
India
Expanding into power generation
and transportation and aviation
Entering into railways projects
with partners
Airport construction and
operation outside India
(Philippines )
There is scope for more growth
as GOI has planned to invest $1
Trillion in infrastructure mostly on
power generation and now many
contracts are awarded more
through EPC
GMR has collaborations with top
players in Energy, transportation,
airport and EPC to learn knowhow
JVs with Malaysia Airports
Holdings Berhad
Consortium partnership with
Megawide and Fraport AG
GMR Group has acquired majority
stake in Geokno so as to mature
the LiDAR technology fully in
India
GMR should focus more on
acquiring more technology
provider company and dedicate
R&D to develop internally

Sources:, www.gmrgroup.in, en.wikipedia.org/wiki/Reliance_Infrastructure, www.rinfra.com, articles.economictimes.indiatimes.com/201504-06/news/60866131_1, www.moneycontrol.com

Technology
Benchmarking
GMR vs R-Infra vs L&T
Level of Technological Competence

Technology Significance
Clear Leader
Base
Base

High-tech
equipments
Project
completion
rate

R-infra, GMR

L&T

R-infra, GMR

IT/ERP

Key

Consultancy

TCE

Key

Technology

L&T

R&D

Emerging

Alternative
energy

Emerging

Military

Favourable

L&T

Key

Pacing

Strong

L&T

Tenable

R-infra, GMR
L&T,Rinfra,GMR

Mahimtura
R-infra, GMR

L&T, R-infra

L&T- Indias GMR- Solar and


largest solar
wind power
power project
projects
R-infra

Weak

GMR- No
patients & no
R&D spend

R-infra
L&T

GMR

Key Takeaways

GMR has been a buyer and user of technology for its core function. In its development it has
never invested in R&D. However this trend persists in the infrastructure industry in India
It has been relying on Public- private partnership model in India and abroad
It is now getting projects on EPC model as this model has less cost fluctuation and uncertainty
It has grown due to its capability to scaling up its project and acquiring technical nuances
quickly to venture into a completely new sector
They have built capabilities to complete a project before timeline
For growth in Indian market it should focus on at least developing efficient processes and
patenting methodology as companies like RIL does which are also users of technology but are
able to patent processes and some products
As Indian government is investing in power generation, R&D will help to cut down cost and
capture renewable energy market apart from traditional sources of energy
It has been expanding into areas like thermal power generation, hydro-electric projects, wind
and solar energy projects as there is a lot of opportunities and investments coming from the
government
It has started to acquire technology supporting vehicles lately and it should keep looking for
such opportunity
Dedicated railways corridors are being planned and GMR has been keen to use new
technology machinery to speed up projects

Appendix
Organization
Chart

Appendix

References

www.geokno.com/index.php/technology/terristrial-lidar

www.gmrgroup.in

en.wikipedia.org/wiki/Reliance_Infrastructure
Microsoft Excel
Worksheet

www.rinfra.com

articles.economictimes.indiatimes.com/2015-04-06/news/60866131_1

www.moneycontrol.com

www.forbes.com/sites/ramcharan/2013/03/19/is-your-core-competence-still-relevant,
articles.economictimes.indiatimes.com/2015-04-06/news/60866131_1

www.gmrgroup.in

en.wikipedia.org/wiki/Reliance_Infrastructure

www.rinfra.com

www.vinci.com

www.moneycontrol.com

www.capitalline.com

www.ey.com/Publication/vwLUAssets/EY-making-india-brick-by-brick/$FILE/EY-making-indiabrick-by-brick.pdf

www.dnaindia.com

timesofindia.cindiatimes.com

Microsoft Excel
Worksheet