Shishir AsthanaMoneycontrol By October 2017, engineering giant L&T’s Group Chairman Anil Manibhai Naik would have retired, leaving his successor SN Subrahmanyan with a pair of large boots to fill.
AM Naik, the highest paid professional in the country has worn more than one hat during his time as a head of L&T. In less than three years of Naik taking charge, he was exposed to a hostile takeover by the Birla’s. As Birla’s already had a 10.05 percent stake in the company they wanted a controlling interest in the company, largely because L&T’s cement business was in direct competition to Grasim.
Naik’s leadership was tested during this period when he met the Prime Minister, and heads of various institutions to allow L&T to keep its professional management. In the end Birla sold its stake to L&T employee trust and in turn took away the cement division from it. It was a win-win to both the players.
Naik learnt the value of stock market and share price during those challenging times. He asked his employees to own a piece of the company and make it so expensive by way of robust performance that it would thwart any further takeover incidents.
Since then L&T has been on an expansion drive. It spread itself into a number of areas from construction equipment, power equipment to nuclear plants to power transmission lines. L&T today has around 150 subsidiaries apart from the various division in the parent company.
From a turnover of Rs 7,666 crore in FY 2000 Naik has built up the company to a turnover of Rs 102,631 crore in FY17. Share price of the company has skyrocketed from average Rs 65 to Rs 1,479 now, a jump of 22 times in 17 years.
But there were mistakes made during the way, which Naik duly acknowledges. Before handing over charge, Naik said in his interview to Moneycontrol, he would like to divest in non-core activities.
SNS now has his job cut out for him. Though Naik said he would be the Chairman of the holding company which will monitor L&T, he has a roadmap ready for SNS to follow-on.
Probably, a learning from the Tata’s mistake where Cyrus Mistry's attempt to change the business model followed by his predecessor Ratan Tata, resulted in a muddy affair with Mistry losing his job.
Naik, the thorough professional, has made sure L&T does not follow the same path. He is making right the wrong decisions taken during his tenure by exiting from divisions that are non-core.
He has also ensured SNS’ induction in L&T is pragmatic and he is exposed to new divisions progressively. Naik is confident that SNS will be able to take charge by July 2017, ahead of the deadline of October 2017.
It has been reported that Naik had planned his first 100 days action even before he took charge as the head of L&T. On his way out he is ensuring that he runs along with SNS for some distance before passing on the baton. A person so meticulous will be difficult to replace.
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