Profile of an Andhrapreneur

21 01 2009

 

Business Outlook carried out a cover story on the several successful entrepreneurs who have emerged from Andhra Pradesh in recent times. These entrepreneurs from Andhra were aptly called Andhrapreneurs. These included the men behind GMR, GVK, IVRCL, LANCO, Nagarjuna Construction and Maytas.

 

 

Since the last week of December ever since the Satyam-Maytas fiasco and the arrest of K.S.Raju, came to fore, AP businessmen are in the news for all the wrong reasons. Hyderabad is acquiring a bad reputation, so much so, that on the day when B Ramalinga Raju made his confession, six of the Top 10 losers in the stock exchange were from Hyderabad.

 

 

There is a certain common thread which runs through when one looks at the strategies and success of these Andhrapreneurs. Most of these companies are floated by first generation entrepreneurs. They started small as construction contractors and cut their teeth in two major projects of AP, namely Nagarjunasagar Dam and Visakhapatnam Steel Project. From construction, they have graduated into bigger construction projects such as roads, irrigation and airports. Power sector is another sector where several of these companies are engaged in either as an operator or as a EPC contractor. From construction to real estate was a natural extension and most of these companies are engaged in real estate projects. And this is where, the fairy tale gets a twist.

 

The construction, infrastructure, power or real estate  industries have a strong link with the government. These Andhrapreneurs have all developed and benefitted from the strong political connections they have nurtured and built in order to further their business interests. They also could scale up fast by virtue of the easy money available through private quity and the IPO route. Showing a huge order book, land bank and accounts (dubious?) , they all catapulted their market valuations several times during the boom period from 2003 to 2007. In 2008 stockmarket crash, most of these companies were hit really hard.

 

 

To look at the profile and lifestyle of a typical Andhrapreneur, look no further than L.Madhusudhan Rao, the Chairman of  LANCO Group. He is the brother of L.Rajagopal, the Founder Chairman who is now a Congress MP from Vijayawada. He is an M.Tech from India followed by an MS from USA. Here are excerpts from an interview to Hindu Business Line in May 2008 :

 

 

Thanks to their boss’s penchant for fancy cars, at least 10 chief executives of the Hyderabad-based Lanco Group enjoy the luxury of driving Mercedes-Benz cars. As for the boss himself — L. Madhusudhana Rao, Chairman of the fast-growing Lanco Group — a Rolls-Royce Phantom is the latest jewel in his collection of fancy cars.

Formula 1 racing and the latest cars are a major draw, but cricket is a strict no-no, except for keeping abreast of the latest developments in the game, says Rao, 42, who steers the fortunes of the diversified infrastructure group with a turnover of over Rs 1,600 crore (FY 2007).

A film a day keeps a lot of tension away, could well describe Rao’s self-prescription, going by the appetite he has exhibited for the celluloid world. “Initially, I would watch about 250 films a year as a student of engineering. They were mostly Telugu and a few from Bollywood and Hollywood,” he says. His favourite stars are Krishna and NTR. Incidentally, his brother L. Sridhar is a film producer.

Family holidays are a must on his list and the family has visited some of the most exotic locales and resorts around the world. Terming himself a ‘family man’, he says, “Even when in Hyderabad and engaged in handling the tough challenges of running a large corporate, I reach office at 10 a.m. and manage to go back to the family by 7 p.m.”

In 1991, Lanco was born, and riding on the platform of economic reforms, the company’s turnover galloped from a mere Rs 3 crore in 1992 to a robust Rs 1,600 crore in just over 10 years. The mantle of leadership fell on Rao when Rajagopal took to full-time politics in 2002. The prime focus of the company was power at that time, he recalls.

“In 2012, when I complete a decade at the helm, I would like to see the Lanco Group (which aims to reach the Rs 3,000 crore mark in FY 2008) as a Rs 40,000-crore asset base company, which is among the top-three companies in power generation. The group will emerge from being a family-run company of the 1980s and 1990s into a professionally-run enterprise,” he says.

He says, “While most businesses in India are still run on the family model, we want to run our business very futuristically, though we also started on the traditional family model. We will put the family culture behind. People should forget Lanco as a family-run company.”

Having been groomed in the Lanco Group, which grew from transport service to contracts executed for large irrigation projects, with its big break coming with the Visakhapatnam Steel Plant, Rao feels the time is right for entrepreneurs to get into sectors ranging from retail to infrastructure. Funds are easy with many private equity and venture groups having entered the scene”, he says.

” What is required” , he adds, ” are good ideas, commitment and passion for entrepreneurs to turn into successful industrialists.”

Another important trait of the Andhrapreneurs is to tom-tom their company’s Corporate Social Responsibility and Corporate Governance. In LANCO’s web-site they mention :

A member of UN Global Compact, Lanco Infratech is recognised for its Good Corporate Governance and Corporate Social Responsibility initiatives led by the Lanco Foundation.

 

 

Professional qualifications, strong political connections, family ties, gigantic ambitions, weakness for fast life, passion for films, pretensions to professionalism, lip service to  both corporate governance and philanthropy – these are some the common attributes that seem to characterize an Andhrapreneur.

 

 

– G. Mohan

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