Mumbai: Here’s what we know about Larsen and Toubro Ltd’s (L&T’s) next boss—in September 2017, we will know who replaces current chairman A.M. Naik. The new chairman will take over on 1 October 2017 when the plan (which has been in place for some time) will be implemented, according to Naik.

It will be an insider.

And if all goes according to plan, it could be S.N. Subrahmanyan, 55, the company’s deputy managing director and president, whom Naik described as the clear number two in the company.

Naik is currently 73. He will turn 75 in June 2017.

Although L&T is a board-run company, it is strongly identified with Naik, and hasn’t always been transparent about its succession plan.

Some clarity emerged last year, in September, when Subrahmanyan was named deputy managing director and president.

More emerged on Wednesday when Naik, apart from identifying Subrahmanyan as number two at L&T, said that given the complexity of the company, an executive hired from outside the company might not be able to steer L&T.

“We have a very complex structure with 82 businesses. So, we will have to plan in advance," Naik said, adding that he had been guiding Subrahmanyan for the last 10 years and actively mentoring him for the last three.

Indeed SNS (as Subrahmanyan is called within the company) owes his meteoric rise to Naik, who spotted him over a decade ago when he was a general manager in the company’s construction unit.

Subrahmanyan, a civil engineer who started in 1984 as a project planning engineer at L&T, was named to the company’s board in 2011. In his three decades at L&T, Subrahmanyan has driven many of the company’s large infrastructure and construction projects, including the construction of the airports in Bengaluru, Hyderabad, Delhi and Mumbai. He also oversaw major international projects, including the metro systems in Qatar and Saudi Arabia.

Responding to a question on his possible accession to the top job at L&T, Subrahmanyan said: “I am A M Naik’s shishya (student)."

Returning the compliment, Naik, when queried about his new role after 1 October 2017, said it would be whatever his shishya wanted it to be.

Naik joined the company in 1965, was named managing director and CEO in 1999, and nominated as chairman in 2003—and it has always been clear that he will retire when he wants to.

Since 1999 (and till March 2016), L&T’s revenue has increased at a compound annual growth rate of 12.98% from 7,400 crore to 58,882 crore.

In Naik’s tenure, L&T has gone global, fought bruising battles with competitors, staved off a hostile takeover and diversified into several new businesses, including the manufacture of defence equipment.

In this period, the driven and hard-driving Naik—he sometimes works for 15-16 hours a day, according to people who know him—has run L&T well, but pretty much run it as his own.

In 2012, L&T split the role of chairman and managing director, elevating Naik as executive chairman; K. Venkataramanan took over as managing director and CEO. His term ended in September 2015.

Naik’s comments on Wednesday provides a degree of clarity on the issue of succession at L&T, but one has to wait and watch how the plan unfolds, said Sandeep K. Krishnan, associate director at global human resource management consulting firm People in Business (India) Pvt. Ltd.

Krishnan cited the earlier example of Venkataramanan being projected as number two.

“Now Subrahmanyan has to prove that he is capable of leading this complex organization and instill confidence among shareholders and employees," Krishnan added.

In 2012, Naik received a five-year extension until the company’s annual general meeting in 2017.

Speaking on the structure at L&T, Naik said the conglomerate has too many businesses, and added that there is a need to rationalize the portfolio to focus on core businesses.

L&T operates in businesses such as construction, heavy engineering, power, defence manufacturing, information technology, finance and realty.

Naik said the restructuring is a continuous process.

L&T, which is often seen as a corporate proxy for the broader economy, has been trying to sell non-core assets to lower debt.

Close
×
My Reads Logout