Mindtree founders have no plan to stay back, says CEO Rostow Ravanan

On Wednesday, the company had announced the appointment of L&T Group's Chairman A M Naik as the non-executive chairman

Mindtree co-founders who resigned from the Bengaluru-based company’s board and executive responsibilities have no plan to stay back, said Rostow Ravanan, outgoing chief executive officer (CEO) and managing director (MD).

Ravanan is also a co-founder of the mid-tier information technology (IT) services company. He said the board has already accepted their resignations, and the timing of their exit was being worked out.

“We are sticking to our plan of this thing (exit). Our resignations have already been accepted and the actual timing is being worked out with the board now. But, (there is) no change in our plans,” said Ravanan. “We want to be responsible to Mindtree and we are waiting for the board to give us a final date of release.”

In an interview on Thursday, L&T Group’s Chairman A M Naik had said he had a meeting with Mindtree’s co-founders and they had assured him of their support to improve their company’s performance. He did not provide any timeline about when they would exit.

On Wednesday, the company had announced the appointment of Naik as the non-executive chairman after the engineering firm secured three board positions — L&T’s CEO S N Subrahmanyan, its Chief Financial Officer (CFO) Ramamurthi Shankar Raman and Senior Executive Vice-President of defence business Jayant Damodar Patil.

Earlier this month, Mindtree’s Executive Chairman Krishnakumar Natarajan, Executive Vice-Chairman and Chief Operating Officer (COO) N S Parthasarathy, and MD & CEO Ravanan had put in their papers both as members of the board and as well as employees of the company. Subroto Bagchi, another co-founder of Mindtree, had opted out of his reappointment on the board.

These exits were prompted after L&T received the “promoter” tag on acquiring 60 per cent stake in the company.

On his future plans, Ravanan said he had a number of exciting ideas.

After the exit of the co-founders, the share price of Mindtree has lost more than a quarter of its value in the past fortnight and touched a 52-week low of Rs 661.35 intra-day before closing at Rs 670.55 on Friday, down around 3 per cent on the NSE.

The IT services firm has also missed Street estimates across the board in the first quarter of current financial year. While it reported 41 per cent dip in its net profit year on year to Rs 92.7 crore, its operating margin fell 520 basis points sequentially to 10 per cent in April-June period.

The firm’s attrition also touched a seven-quarter high of 15.1 per cent owing to the uncertainties arising out of the transition.

“Mindtree has a higher exposure to discretionary spending, which have short durations and requires strong communication with the clients, making continuity important,” said Prabhudas Lilladher in a research report, adding: “We believe managing people aspects and cultural integration is critical.”