Of all the annual general meetings (AGM) in the IT sector this year, Mindtree’s was the most anticipated and for obvious reasons.
The AGM was an end of sorts to the takeover drama that had played out since March.
SN Subrahmanyan, CEO, L&T joined the meeting, first since his appointment as the non-executive chairman by the board. It would be the last for the co-founders Rostow Ravanan, Krishnakumar Natarajan, NS Parthasarathy and Subroto Bagchi, who had resigned as board members and also from their key positions CEO, chairman and COO, respectively.
At this juncture, one would expect the investors would be keen to know how L&T will ensure stability with all its co-founders gone and empathy for founders.
However, the AGM turned out to be anticlimactic.
There was no question about who the next CEO will be, if and when the L&T’s own IT firms will be merged at any point in time.
Barring one investor, who raised questions about the manner in which L&T went about acquiring the company, there was barely a whisper. In fact, what most investors were positive about this and are confident that the takeover will be better for Mindtree. There was hardly any question about founders resigning and a totally new management taking over.
An investor told Moneycontrol, “What is there to worry. L&T is a great company. They even have their own IT companies. With such a long history it can only be better for the company.”
It was one of the reasons why investors like him have continued to hold stock. From the time the takeover was completed on June 28, L&T’s stock plunged from the range of Rs 970s to Rs 690 now.
“I know the stock price has fallen but I am confident of its share price reaching over Rs 1,000,” another said.
If there was any worry, it was more about if and how the company under L&T will continue to give bonuses and hefty dividends like Mindtree did. Mindtree for FY19 announced total dividend of Rs 27, their highest ever, to mark their 20th anniversary and crossing $1 billion in revenue.
One investor asked Subrahmanyan, “Sir, we are happy that L&T has taken over and it can benefit from your experience. But L&T, as a company, we have not seen it giving lot of bonuses or hefty dividends to investors. We hope it will continue.”
Earlier, analysts had raised concerns that the hefty dividend accounts for about close to 50 percent of cash reserves. There have been reports that L&T might be concerned about this too, though there was no official statement from the company.
How did Subrahmanyan respond? He said all the right things, of course.
In his maiden Mindtree AGM, Subrahmanyan, who had to get the permission from Chairman Natarajan to speak given that he is yet to be voted by shareholders, said L&T had always been for the dividend.
He added that Mindtree will be run separately or in his words, “at arms’ length”. The company will do whatever it could to ensure continuity and legacy of the founders.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
