| Naik's next mission: Younger L&T |
| Somasroy Chakraborty & Katya Naidu / Mumbai March 10, 2012, 0:37 IST |
Age may not be at his side, but at 70, A M Naik has no plans to call it a day. On a day Indian batting legend Rahul Dravid decided to hangup his boots, Naik's innings at Larsen & Toubro (L&T) got extended by another five years, as executive chairman of the company.
By his own admission, Naik could not find a successor for himself. For, he describes his successor as someone willing to kill himself four times a day, has worked for over 100 years and started several companies from the scratch, and prioritise profession over family matters.
His fervour for L&T is comprehensible, as he spent almost half a century in the organisation, turning it into the biggest engineering and construction conglomerate in the country. Even at this age, he is spirited enough to work for 14 hours a day and seven days a week.
Naik's colleagues describe him as a survivor and feisty leader — one who has endured several board room battles, thwarted takeover attempts from powerful business families, and removed the innate bureaucracy inside the firm, making it one of the few widely-held companies that are managed professionally without a single owner.
When the AV Birla Group tried to takeover L&T, Naik fended off the acquisition scare by selling the non-core cement business to Grasim Industries, a Birla group company. The move has been widely described as ‘Naik's Master Stroke’, as in the process he got rid of the commodities business that did not gel with L&T's other businesses and got the firm's focus back on core construction and engineering operations.
Under Naik, L&T also entered into new businesses – railways, ship building, defence, and supercritical power equipments — and saw its turnover expanding to over Rs 45,000 crore.
However, there is one unfinished agenda on Naik's list and the odds appear to be stacked against him in this case. He has to find his own replacement or create a band of professional managers who can run L&T's many businesses with the same efficiently of his.
The leadership crisis at L&T has a legacy. Naik himself has been a victim of slow promotions for the better part of his career, despite having in-depth knowledge across businesses and working for 18 hours a day.
While Naik was an exception, the bureaucratic culture of rewarding experience over performance led to the exit of many top performing executives from the firm over the past four decades.
After taking charge as the managing director and chief executive officer in 1999, Naik had altered the performance appraisal process to one based on meritocracy, but L&T still stares at a leadership vacuum. His task became even more difficult with the emergence of domestic software exporters, who started to hire engineers offering higher salaries.
"We have very good 60's vintage but we should have had very good 70's and 80's vintage, who would have been in the running to become directors (but are no longer with the company)," Naik told Business Standard in a recent interview.
| SPREAD SHEET How the company stands now, as compared to 2003 when Naik took over as CMD | ||||||||||
| Net worth | Total debt | Net sales | Net profit | MCap ( March end) | ||||||
| Consolidated figures | Rs crore | YoY % Growth | Rs crore | YoY % Growth | Rs crore | YoY % Growth | Rs crore | YoY % Growth | Rs crore | YoY % Growth |
| FY2001-02 | 3,101.44 | - | 4,978.09 | - | 8,683.57 | - | 313.90 | - | 4,494.35 | - |
| FY2002-03 | 3,182.22 | 2.60 | 4,700.89 | -5.57 | 10,318.66 | 18.83 | 374.02 | 19.15 | 4,591.69 | 2.17 |
| FY2003-04 | 2,614.71 | -17.83 | 2,769.22 | -41.09 | 10,947.08 | 6.09 | 778.45 | 108.13 | 1,428.98 | -68.88 |
| FY2004-05 | 3,285.03 | 25.64 | 3,453.83 | 24.72 | 14,486.86 | 32.34 | 1,127.69 | 44.86 | 12,927.00 | 804.63 |
| FY2005-06 | 4,935.11 | 50.23 | 3,498.69 | 1.30 | 16,538.52 | 14.16 | 1,306.66 | 15.87 | 33,423.92 | 158.56 |
| FY2006-07 | 6,893.62 | 39.69 | 6,432.22 | 83.85 | 20,508.22 | 24.00 | 2,272.31 | 73.90 | 45,862.42 | 37.21 |
| FY2007-08 | 10,805.21 | 56.74 | 12,315.93 | 91.47 | 29,311.02 | 42.92 | 2,257.82 | -0.64 | 88,414.90 | 92.78 |
| FY2008-09 | 13,955.59 | 29.16 | 20,370.04 | 65.40 | 40,377.49 | 37.76 | 3,707.12 | 64.19 | 39,397.11 | -55.44 |
| FY2009-10 | 20,960.45 | 50.19 | 24,607.32 | 20.80 | 43,833.39 | 8.56 | 5,443.67 | 46.84 | 97,938.80 | 148.59 |
| FY2010-11 | 25,020.90 | 19.37 | 37,340.19 | 51.74 | 51,819.81 | 18.22 | 4,455.15 | -18.16 | ||
