New Delhi: After acquiring Mindtree in a hostile takeover, Larsen and Toubro (L&T) Tuesday sought to assuage investor concerns, saying it can provide further impetus to the IT company's growth by way of board-level oversight and relevant client connects.
Addressing the shareholders of Mindtree for the first time after the takeover, L&T CEO and MD S N Subrahmanyan said the IT firm would be operated at arm's length from the group's entities. With its experience and track record of managing two successful IT businesses, he said, L&T can add value to Mindtree and its stakeholders.
"L&T can provide further impetus to the long-term growth of Mindtree by way of board-level oversight and the relevant client connects. We will be able to harness these relationships for the benefit of Mindtree's stakeholders... L&T plans to leverage its 360-degree relationship with clients for accelerated growth of Mindtree," he noted.
Subrahmanyan along with Jayant Damodar Patil and Ramamurthi Shankar Raman, has been appointed to Mindtree board.
Mindtree co-founders and board members—Krishnakumar Natarajan (Chairman), Rostow Ravanan (Chief Executive Officer), and Parthasarathy NS (Vice Chairman)—who had strongly resisted the takeover, left the company after the acquisition.
Subrahmanyan complimented Mindtree founders and former promoters, who were first-generation entrepreneurs, for building a "unique culture" and creating a billion-dollar revenue business entity.
"Mindtree originated with a set of professional founders who had nothing other than their skills and a shared sense of purpose to create something special. This shared mission, passion and spirit of ownership contagiously spread across multiple layers of employees, leading to a unique organisational culture that delivered exceptional results for clients and shareholders," he said during the annual general meeting in Bengaluru.
Mindtree would be kept distinct from L&T Infotech (LTI), L&T Technology Services (LTTS) and the recently formed business division L&T-Nxt, he added. "These entities would run at an arm's length. There are other major conglomerates in India like Tata, Mahindra, Hinduja and HCL which have also been running multiple IT companies successfully," he said.
Drawing parallels between Mindtree and L&T, Subrahmanyan said L&T too was started by founder managers and has successfully transitioned into a high-performing, professionally-managed company.
Meritocracy drives decision-making within L&T Group and that any employee in the professionally-run organisation can dream to become the CEO one day, he said. "Growth in L&T is purely on the basis of performance. Meritocracy drives decision making within L&T group," he added.
According to him, the group has always worked on the principles of good corporate governance, strong financials and social consciousness—all of which would provide an opportunity for Mindtree to grow with enhanced stability.
"We will strive to provide new-age technologies, services, digital and content in an ever more increasing manner to take the organisation forward," Subrahmanyan said.
L&T's takeover of Mindtree is the first-ever hostile takeover in the country's IT space.
First, the group bought 20.32 percent stake in the Bengaluru-based company from V G Siddhartha and his coffee enterprise for over Rs 3,000 crore in March. Subsequently, it picked up more shares from the open market and through an open offer. Now, Mindtree has been categorised as a promoter of Mindtree with 60.06 percent stake.
Shareholders of Mindtree, including the new promoter Larsen and Toubro (L&T), on Tuesday approved a proposal for a special dividend of Rs 20 per share for FY2019. The special dividend, which is expected to have an outgo of about Rs 328 crore from the books, was proposed by the previous promoters of Mindtree to celebrate the twin achievements of exceeding $1 billion annual revenue milestone and 20th anniversary of the company.
According to a regulatory filing by Mindtree, 99.99 percent (14.39 crore) votes were cast in favour, while 124 votes (0.01 percent) were against of the proposal at the company's 20th annual general meeting on Tuesday. At the end of June 2019, founders held about 13.3 percent stake. Other proposals for payment of Rs 9 a share in interim dividend and Rs 4 per share as final dividend were also cleared with similar support.
Updated Date: Jul 17, 2019 08:05:50 IST