GMR Airport Concession: Mumbai Versus Delhi Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

On January 31, 2006, a consortium led by GMR Group (GMR) was chosen as the only technically competent bidder. However, in order to avoid a monopoly in Indian airport operations, GMR was requested to pick between the two airports and match the financial bid of another bidder that was not technically qualified for the work.

The pride of the National Capital Region, the Delhi airport, would function as an entrance for dignitaries, participants, and other guests arriving for the forthcoming Commonwealth Games to be held in New Delhi in October 2010. However, the Mumbai airport was the gateway to company investments in India. Which airport would give GMR an edge in the global aviation sector? Which choice was in line with GMR’s vision?

Learning Objective: The case addresses how tactical flexibility enables entrepreneurs to appraise decisions concerning investment in major projects requiring utilities, where the pricing is controlled.

The case is intended to accentuate the following learning objectives:

Understanding of the intricacies of capital investment in the context of an industry defined by significant investment, long gestation, a finite time horizon, and a regulated sales model:

Building on fundamental knowledge in project appraisal techniques, for example net present value, internal rate of return (IRR), and modified IRR, and assessing feasibility at the bidding stage;

Appreciating the nature of managerial flexibilities accessible long gestation jobs; and

Demonstrating the use of simulation as a means to value managerial flexibilities embedded in a project through an illustrative example.

Publication Date: 05/25/2016

This is just an excerpt. This case is about Finance