At the GVK’s 25th Annual General Meeting held in August 2019, shareholders raised three key issues: When will the company bring down debt? When will it pay dividend? How will efforts of the Adani Group to buy stake in the Mumbai International Airport Ltd be handled?

GVK Reddy, Chairman of the GVK Power & Infrastructure Ltd, had then said: “The debt will be addressed by selling stake at the holding company level and at other businesses; the dividend will be paid once we turn profitable.”

However, to the third question on the Adani Group — which had just around that time it diversified into the airports business — buying stake, Reddy said, “What will they do? They will have to sit there,” pointing to where shareholders were sitting in the massive Satyasai Auditorium.

He added: “We are in the process of divesting stake.” And within two months thereafter, GVK, through its airport subsidiaries, inked agreements to raise ₹7,614 crore from subsidiaries of the Abu Dhabi Investment Authority, the Public Sector Pension Investment Board and the National Investment & Infrastructure Fund.

However, while the stake deal was about a $1 billion, it had come a little late. By then, the Adani Group was already gunning for 23.5 per cent, targeting Bidvest’s 13.5 per cent and Airports Company of South Africa’s 10 per cent. There have been several issues around the strategic sale of the asset and the matter was taken up at several forums, including an arbitration tribunal.

At that time, GVK had 50.5 per cent stake in MIAL and the Airports Authority of India 26 per cent.

Around August 2019, after the AGM, GVK started getting into development mode for the ₹15,000-crore Navi Mumbai International Airport and awarded the EPC contract for the airport to construction major L&T.

Too little, too late?

Analysts believe that the stake divestment in MIAL came in late and also the moves to divest stake in the holding company did not click due to various other issues. In fact, couple of term sheets, which were about to be signed, did not materialise.

As a result, GVK had to sell the family silver — Bangalore International Airport Ltd — to Prem Watsa headed Fairfax Holdings to pare its mounting debt estimated at about ₹33,000 crore then.

The power sector — GVK had both a coal-fired plant at Goindwal Sahib in Punjab and gas-based plants in Andhra Pradesh — was also in distress due to lack of fuel supplies. In addition, the coal mine allocated at Tokisud was cancelled when the Supreme Court scrapped all the coal mine allocations, and the nearly $1 billion mine in Australia could not take off.

With all these, the group started making losses. From August AGM onwards, GVK has had to face several issues, including a whistle blower triggered probe by the Ministry of Corporate Affairs. Now, the CBI has registered an FIR against GVK Reddy, and his son GV Sanjay Reddy, for allegedly siphoning off ₹705 crore.

The Bombay High Court had declined the Adani Group’s plea to restrain Bidvest Group from selling its stake in MIAL to third party. A section of the investor community believes that the GVK problems are linked to stake sale issue and the delay in making arrangements for the payment.

GVK closed the fiscal year ended March 2019 with revenues of ₹4,363 crore and a loss of ₹304 crore.

As of December 31, 2019, certain loans extended to the group have been classified as non-performing by the banks and had audit qualifications.

Apart from the company, for the 83-year-old GVK and his large business empire, their reputation is at stake. Any setback to the airport business could have far-reaching implications.

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