SIGNS OF TROUBLE SURFACED IN 2019
● The hints of financial irregularities at the Mumbai International Airport Limited (MIAL) had come out in open when a whistleblower had red-flagged the issue in September 2019. The bad time for the company, however, began about 8 years back to be precise.
While the CBI booked GVK Group founder G.V. Krishna Reddy and his son G.V. Sanjay Reddy for siphoning off over Rs 700 crore from the Mumbai airport, the hints of financial irregularities at Mumbai International Airport Limited (MIAL) had come out in the open when a whistleblower had red-flagged the issue in September 2019.
Based on the complaint, the Ministry of Corporate Affairs (MCA) ordered in October 2019 an inquiry by the Registrar of Companies by examining financial documents filed by the GVK Group Companies. The bad time for the company, however, had begun much before about eight years back to be precise.
The GVK Group, which traces its roots to the 1960s when its founder worked as one of many contractors for the Nagarjuna Sagar Dam, tried to cash in on India's growth during the beginning of the third millennium. Attempts to clock fast growth in profits led to the company opting for risky ventures in the power and infrastructure sectors.
The growth edifice built on the foundation of debt tottered when it could not find investors to buy projects developed in the Public-Private Partnership model. Its financials suffered further when it could not get gas which it expected from Reliance Industries Ltd's Krishna-Godavari gas wells. The GVK Group also ate more than what it could chew when it raised debt to increase stakes in Mumbai and Bengaluru airports.
Within seven years from the day of founding GVK Power and Infra, it earned a dubious distinction of finding a place in the House of Debt, a list of the 10 most indebted corporate houses in India compiled by Credit Suisse AG in 2012. Its gross debt in 2015 stood at Rs 33,933 crore.
The company, according to an FIR filed by the CBI, siphoned off money from the Mumbai airport by executing bogus work contracts in the financial year 2017-18, which is two years after the company made an entry into the House of Debt list. Though the company sold its stake in one of its jewels, Bengaluru airport, the group flagship company GVK Power and Infra continued to post losses.