Baton passes at L&T as Naik makes way for Subrahmanyan

Subrahmanyan, known as SNS, rose through the ranks after joining L&T’s engineering construction and contracts (ECC) division in 1984 as an engineer

Anirudh Laskar
Updated11 May 2023, 12:39 AM IST
Baton passes at L&T as Naik makes way for Subrahmanyan
Baton passes at L&T as Naik makes way for Subrahmanyan

Larsen & Toubro Ltd has named S.N. Subrahmanyan as its chairman, effective 1 October, succeeding A.M. Naik, a legendary manager who has worked at the engineering conglomerate since 1965 and has led it, first as CEO and then as chairman, since 1999.

Subrahmanyan, 63, a civil engineer, played a crucial role in L&T’s acquisition of Mindtree Ltd in the country’s first and largest hostile takeover.

Subrahmanyan, known as SNS, rose through the ranks after joining L&T’s engineering construction and contracts (ECC) division in 1984 as an engineer. He was spotted and mentored by Naik and was appointed CEO and managing director of L&T on 1 July 2017.

L&T, on Wednesday, also announced a 21% increase in net profit at 10,471 crore for FY23. In a statement, the company said Naik would continue to serve the group as its chairman emeritus.

On 8 February, Mint first reported that Naik would step down as L&T’s chairman in October. Although everyone in L&T knew about the leadership transition, its timing was a secret due to Naik’s tight grip on the company’s board and management.

“L&T has been my life,” Naik said, while announcing his decision to step down as the conglomerate’s non-executive chairman. Naik is revered within L&T for having saved the company from attempted takeovers from late Dhirubhai Ambani-led Reliance Industries and the Aditya Birla Group. Having divested the cement business for a profit, Naik engineered the perfect deal by ensuring that L&T’s Employee Trust would control close to a 14% stake in the company. Naik will continue as the chairman of the trust, continuing to wield some influence in the company.

“The growth trajectory that the company has charted in the last two to three decades is exemplary. I am sure that Subrahmanyan will continue to foster the high growth and entrepreneurial culture at L&T. In him, L&T has a highly capable, passionate and empathetic leader,” Naik said.

Naik said the emphasis L&T laid on IT and technology services had a significant positive impact on the profitability of the organization.

In fact, IT and technology business became a key part of L&T’s mainstay after the company consummated the acquisition of Mindtree in 2019, led by Subrahmanyan.

“I mentored him for 8-10 years. I sent him abroad to gain experience. He’s very good. And he does a fantastic job,” Naik said in an interview in February.

On 27 June 2019, under Subrahmanyan’s command, L&T gained control of Bangalore-based IT and outsourcing firm Mindtree by raising L&T’s stake to 60% in the latter through an open offer, despite strong resistance from Mindtree’s founder promoters—N. Krishnakumar, N.S. Parthasarathy, Subroto Bagchi and Rostow Ravanan.

To his credit, Subrahmanyan astutely drove the exhaustive Mindtree takeover process, which, to date, is often termed one of the toughest M&A deals ever by many investment bankers.

The deal entailed the purchase of a 20.4% stake in Mindtree first from late coffee baron V.G. Siddhartha (founder of Café Coffee Day), a subsequent purchase of shares from the market, and finally, an open offer that marked the culmination of a tough year-long effort by the Mumbai-based conglomerate to gain control of Mindtree through a 11,000 crore hostile bid.

“I would humbly like to take up this responsibility and take the legacy of trust, customer focus, timely delivery, quality, people centricity, and professionalism forward,” Subrahmanyan said while being promoted as the group’s chairman and managing director.

Post the acquisition of Mindtree, in November 2022, under Subrahmanyan, L&T Infotech was merged with Mindtree to create the country’s fifth-largest IT firm by market capitalization. As the vice-chairman of the merged entity, Subrahmanyan grew the conglomerate’s IT business significantly over the past four years, and as of date, LTIMindtree Ltd commands a market capitalization of 1.36 trillion.

“Perhaps, we are the only company which has succeeded in creating from scratch the fifth largest IT company in India,” Naik told Mint in February.

“His (Subrahmanyan’s) ability to develop innovative solutions in the construction and infrastructure space has seen him rise rapidly up the leadership rungs of the company,” said L&T in a statement on Subrahmanyan.

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First Published:11 May 2023, 12:39 AM IST
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