Naik hands over L&T’s reins to Subrahmanyan

MUMBAI: Larsen & Toubro’s A M Naik (80) will step down as nonexecutive chairman of the company, which he had joined in 1965 as a junior engineer. He will hand over the reins to CEO & MD S N Subrahmanyan (63), who will take over as executive chairman from October 1, when Naik becomes chairman emeritus.
Naik, however, is expected to continue to wield influence over L&T’s affairs as he will remain chairman of L&T Employee Trust, the single largest shareholder of the Rs 1.9­lakh­crore enterprise. While Subrahmanyan will be re­designated as chairman and MD, L&T sees no legal basis to appoint a CEO in his place. Subrahmanyam will have seven years to be at the helm of the board of L&T as the retirement age for executive chairman and MD is 70 years.

In a regulatory filing, the company said, Naik, who became CEO in 1999 and chairman in 2003, has decided to relinquish his responsibilities with effect from September 30. It added that he has been conferred the status of chairman emeritus by the board. The octogenarian will join the list of longstanding directors/promoters such as Ratan Tata, Adi Godrej and K P Singh of DLF who have been appointed as chairperson emeritus of the companies/groups they have been part of. Though law doesn’t recognise a chairperson emeritus title, s/he can be an invitee to the company’s board meeting without having rights to vote.
L&T had restructured leadership roles to extend Naik’s tenure. In 2012, it split the post of chairman and MD to allow Naik to continue as chairman. Five years later, it redesignated Naik as its nonexecutive chairman. He will step down from this position by September end. Naik, who is widely acknowledged as the architect of the transformation of L&T, will leave his imprint on the company.
During his tenure, the market cap of L&T — which was founded by two Danish nationals in 1946 — rose to Rs 3.3 lakh crore on Wednesday from Rs 5,815 crore in 1999. Revenue and profit increased to Rs 1.9 lakh crore and Rs 10,471 crore in FY23 from Rs 7,292 crore and Rs 471 crore in 1999, respectively.
Naik also managed to fend off takeover attempts by Reliance Industries and Aditya Birla Group in the early 2000s and conceptualised L&T Employee Trust by ringfencing the company from future takeover attempts. He also led L&T into new businesses including defence and IT services.
A source said, while Naik is very agile mentally, he has his ups and downs physically as people his age would have. He wanted to cut down his assignments and focus on matters close to his heart, like philanthropy, and this (stepping down) is a part of succession planning, the source added.