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    1 - GMR in Maldives

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    rajthakre81
    Political uncertainty in Maldives took a toll on GMR's business in the country. The Maldives government terminated its contract with GMR to build, own, and operate the Male airport, costing the Indian company $500 million. Political opponents of the democratically elected president stoked nationalist sentiments against GMR by claiming it was invading the country as a foreign company. After the president was ousted in a coup, the new government further fueled anti-GMR campaigns and ultimately scrapped the agreement, causing major financial losses for GMR.

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    1 - GMR in Maldives

    Uploaded by

    rajthakre81
    112 views2 pages
    Political uncertainty in Maldives took a toll on GMR's business in the country. The Maldives government terminated its contract with GMR to build, own, and operate the Male airport, costing the Indian company $500 million. Political opponents of the democratically elected president stoked nationalist sentiments against GMR by claiming it was invading the country as a foreign company. After the president was ousted in a coup, the new government further fueled anti-GMR campaigns and ultimately scrapped the agreement, causing major financial losses for GMR.

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    1_GMR in Maldives

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    Political uncertainty in Maldives took a toll on GMR's business in the country. The Maldives government terminated its contract with GMR to build, own, and operate the Male airport, costing the Indian company $500 million. Political opponents of the democratically elected president stoked nationalist sentiments against GMR by claiming it was invading the country as a foreign company. After the president was ousted in a coup, the new government further fueled anti-GMR campaigns and ultimately scrapped the agreement, causing major financial losses for GMR.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    112 views2 pages

    1 - GMR in Maldives

    Uploaded by

    rajthakre81
    Political uncertainty in Maldives took a toll on GMR's business in the country. The Maldives government terminated its contract with GMR to build, own, and operate the Male airport, costing the Indian company $500 million. Political opponents of the democratically elected president stoked nationalist sentiments against GMR by claiming it was invading the country as a foreign company. After the president was ousted in a coup, the new government further fueled anti-GMR campaigns and ultimately scrapped the agreement, causing major financial losses for GMR.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    Political Uncertainty has Taken a Toll on GMR’s Business in Maldives

    Sidharth Kapur, CFO, of Indian origin GMR Group of companies, could not believe the news that
    Maldives government was preparing to terminate contract which gave the company exclusive right
    to build-own-operate the Male airport of the country. Immediate thinking was why the government
    headed by president Mohamed Waheed was crazy for terminating contract worth 500 million USD.
    The GMR Group, headed by the great Indian entrepreneur Mr G.M Rao successfully built, owned
    and operated two major airports in India namely Indira Gandhi International Airport, Delhi and
    Rajiv Gandhi International Airport, Hyderabad. Both the airports were state of the art and the
    company won numerous awards and accolades for quality and efficiency in India. The company
    earned reputation of being a quality infrastructure developer and became a big name in India with
    no time. The company had to fight out competition from other big infrastructure developer like
    Larsen & Toubro, etc. in order to win over contracts in respect of different other infrastructural
    projects in India. The company grew up in a strong democratic system in India where construction
    bid evaluation and winning them over seemingly happen in transparent way without any direct
    involvement of government intervention. The company with Indian success in its stride went to
    repeat the same at the global level. During 2008 the company made test internationalization
    through purchase of UK based Power Company Intergen followed by takeover of an Indonesian
    coal firm and a Singaporean Power company during 2009. During 2010 the company continued
    with internationalization and successfully contested a competitive bidding process to win over the
    contract to operate and expand Ibrahim Nassir International Airport of Maldives. The entire
    bidding process was conducted under the watchful eye of International Finance Corporation (IMF)
    and the country signed the agreement to this effect during June 2010, which finally brought the
    GMR group to Maldives. Apparently, till then, no problem of doing business in Maldives could
    be noticed by the GMR managers. However, it was not known to them clearly that the political
    opponents of first democratically elected President Mohamed Nasheed were looking for an
    opportunity to shake up patriotic feelings in the country to garner popular support towards change
    of government. Just when GMR, after paying the statutory payments to the government of
    Maldives, started operating the airport and levied a $25 per passenger Airport Development
    Charge (ADC) for terminal expansion, a turbulent situation surfaced. First, the passengers using
    the airport declined to pay the tax, and second, a popular ‘save country from foreign company’s
    invasion’ type of sentiment was carefully allowed to be brewed up by political opportunists. The
    situation further flared up when the government agreed to pay the lost amount to GMR to honor
    the agreement. Several igniting public speeches came out from the political opponents and
    suddenly it started looking as if this was a fight of the people at large to ‘reclaim’ the airport from
    GMR for patriotic reason. For GMR, things further worsened when President Nasheed was ousted
    in a midnight coup. The new government fueled the anti-GMR campaign further and successfully
    drabbed presence of GMR in Maldives as anti-nationalistic. Finally, the cabinet decided to scrap
    the agreement with GMR, which the previous government signed leading to huge financial loss
    for the Indian company.

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