Naik bids goodbye to L&T as chairman; gets Rs 32 cr worth leave encashment

Will continue to address AGM for three more years as non-executive chairman

Larsen and Toubro (L&T) might be bidding a farewell to Executive Chairman A M Naik but he will continue to address the annual general meeting for three more years — albeit in a non-executive role.

“Although I shall address you in the years ahead as chairman, this is the last time I am doing so in the executive capacity,” said Naik on Tuesday, at the company’s AGM. In the course of the meeting, whenever anyone said it was his last, Naik reminded them he would be there in the next three as well.

In April, Naik had announced he would step down as executive chairman in September as part of a succession plan. He would be the non-executive chairman from October. S N Subrahmanyan has been appointed as the company’s chief executive officer and managing director from July 1.  

“In addition to Mr Subrahmanyan, I have mentored most of the members of the current leadership team, and am engaged in mentoring 25 more top executives. Rest assured, your company is in very good hands,” Naik said in his speech.

He added L&T’s brand value, based on independent research, was $4.6 billion.

At the AGM on Tuesday, Naik was given a standing ovation by shareholders for his contribution to the company. In the annual report for 2016-17, the company said Naik’s retirement benefit was Rs 38.04 crore, included encashment of accumulated past service leave worth Rs 32.21 crore.

Naik was seen in his usual humour at the AGM, asking shareholders to limit both the duration and the demands made in their speeches, effortlessly speaking in English, Hindi and Gujarati.

He was responding to demands, including allotment of affordable housing, bonus issues and right issues to shareholders.  A loose translation of Naik’s response in Gujarati to these demands was: “You will ask for housing, somebody for bonus shares, somebody for rights issue and in doing this the company will not exist.”

In a press briefing after the AGM, Naik added, he would not be part of the day-to-day activities of L&T in his non-executive role. He would, however, be there at important company events.

Subrahmanyan said the company was confident it would meet its order inflow guidance and targets set for the current financial year. The company is also considering an infrastructure investment trust option for some of its road assets.

“InvITs for some of our assets is a worthwhile development. In terms of timeline, it is a length procedure and a bit early to commit on that. The time is right, we need to work through the process to actually consummate the transaction,” said Shankar Raman, chief financial officer for L&T.

Commenting on the ongoing monetisation plan, part of the company’s focus on core businesses, Naik said two to three more companies would be divested from in the current financial year. He added the company was open to looking at acquisitions in artificial intelligence and technology in US geographies.