Aim to be leading player in infra projects: GVK Power

March 3, 2006

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GVK Power & Infrastructure is the new IPO that has opened for subscription today, it is within a price band of Rs 260 to Rs 310.

Director at GVK Power & Infrastructure, G V Sanjay Reddy believes that infrastructure is key to India’s growth, and their company is focussed on that for the last many decades.

Going forward, he says in the next 5-10 years their vision is to become a leading player and developer of infrastructure projects including power.

Excerpts from CNBC-TV18’s exclusive interview with G V Sanjay Reddy:

Q: Could you put the business in perspective because there is an integration with GVK industries, and it is important to understand what would happen once this integration happens in terms of the power plants that you will run?

A: As we are all aware that India is growing at a phenomenal pace as far as the GDP is concerned, and one of the key stumbling blocks for future growth in India is primarily going to be infrastructure. This is very clear to all of us.

The government over the last few years has taken substantial initiatives towards improving this situation. On the other side, GVK over the last many decades, has been an infrastructure-focused company. We have setup India’s first private power plant which went into operation in 1996, the first IPP.

We have setup India’s largest six lane BOT toll road in Rajasthan, Jaipur to Kishangarh, which was inaugurated by the Prime Minister last year. We have many other projects in the pipeline. So taking advantage of the market opportunity and our background, we have created a holding company by the name of GVK Power & Infrastructure, which initially will have three power projects under its fold. One is Jegurupadu Phase-I which was India’s first IPP, is in operation for ten years, and an expansion of that will add a total capacity of 436 megawatts.

Another project called Gautami Power, which is about 464 megawatts and we are taking the total capacity to 900 megawatts. This is the first phase we are looking at. In addition to power, we are also looking at including other aspects of the infrastructure area like transportation, urban infrastructure and many other new infrastructure opportunities going forward, under this holding company.

Q: On both those accounts – What is it that you want to ramp-up your capacity to on your power segment, and can you give us a sense at all of your order book from your infrastructure side?

A: Currently outside of GVK Power & Infrastructure, within the GVK Group we have certain power projects or the order book, when they mature, they will be offered to GVK Power Infrastructure to be developed. GVK Power & Infrastructure will be a sole company through which we will develop the power business.

We have close to 2000 megawatts of power at various stages of development, out of which about 700 megawatts is in Uttaranchal and another 1200 megawatts in coal is in different parts of the country. As and when these projects become matured then the right of first persual will be given to GVK Power & Infrastructure, we will implement the projects.

Q: The holding company will not take part in any of road, airport projects that you are engaged in, because we all know the news about Mumbai airport? Does that have anything to do with GVK Power & Infrastructure?

A: The intention of our company is to have all our infrastructure businesses going forward under one single vehicle and that would be GVK Power & Infrastructure. That intent is clearly stated as part of the prospectus and initially since we have the projects in power, which are in operation, we have started off with these power assets. With respect to the other areas, whether its roads, airports and things like that, there are certain issues which have to be resolved before we can offer it to GVK Power & Infrastructure, if one wants to bring it under the holding company.

That is something, which will be considered. In addition, any future projects that we bid in infrastructure will be taken up under the same banner. For example, even airport project also depending on stage of the project will be offered to GVK Power & Infrastructure. Ofcourse, their issue is relating to the fact that; once we come under the Sebi guidelines, how do we value it, GVK Power & Infrastructure has its own independent board, which has to evaluate the value proposition of those existing operating assets coming under this.

But clearly going forward all the future infrastructure projects that we are going to bid for and develop, power or otherwise especially in certain key areas, will be under this vehicle. After 5 – 10 years, our vision is to become a leading player, developer of infrastructure projects including power.