I am paranoid about retaining talent: Naik
The Origin:
The evolution of L&T into the country's largest engineering and construction organization is among the most remarkable success stories in Indian industry.
L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro. Both of them were strongly committed to developing India's engineering capabilities to meet the demands of industry.
| Soren Kristian Toubro Henning Holck-Larsen
(27Feb06-4Mar82) (4Jul1907 - 27Jul2003) |
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| The Photos are given below:
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Large black iron gate hides the two-storeyed building — suitably called High Trees — and the garden surrounding it. Once inside, you can't help but notice the huge driveway, which unlike most houses in Mumbai, has place to park at least 10 cars comfortably.
In the pistachio-green nest of A M Naik, chairman & managing director, Larsen & Toubro, we park ourselves in a corner. The bungalow is bang in the middle of the calm and tony Pali Hill in Mumbai's western suburb of Bandra, where some of the leading filmstars live and Dilip Kumar happens to be one of his neighbours.
We can hear a dog bark in the background and remember the 'Beware of Dogs' sign at the gate, and hasten our steps through the quaint wooden staircase leading up to Naik's office. The first floor of Naik's sprawling house serves as an office from where the workaholic CEO manages the show quite often. He starts his day around 7 am and is still in the office when most people hit the bed. Naik's last meeting spilled over into our time and as we waited patiently, we could not help but notice a bunch of young and middle-aged executives, pacing up and down, exchanging notes from time to time, pretty much on their toes. One of them told us that they have been there since eight in the morning and have already had several rounds of meetings.
In fact, before the TOI meeting in the evening, Naik had a high-profile rendezvous with Michael Geoghegan, HSBC's global chief executive. After our meeting, he was scheduled to meet the top brass of a shipping major.
When we caught up with the head honcho of L&T, the country's largest engineering-to-construction conglomerate, over 'poha' and other assorted snacks, we found the 68-year-old remarkably agile. It was also not difficult to note that Naik, dressed in a blue blazer with a Tricolour badge and the L&T logo on its lapel, appeared pressed for time.
Naik has a couple of years left to retire and wants to leave behind a strong but a 'less complex' organisation. The trademark Gujarati skill of business strategising is at work, and Naik says that the final blueprint that will drive the company's growth in the future, helped by international consultants McKinsey and Bain, will be out in the next three to four months.
In an interaction that lasted an hour, Naik is forthcoming on the gears he wants to shift, but pushes hard to keep the conversation within what is already in the "public domain". He has already set the pace with the sale of the cement, ready-mix concrete and petroleum dispensing pump businesses. He says there would be more to follow. However, the affable CMD withdraws into a shell occasionally when asked about the succession planning at L&T and the legendary takeover battle L&T fought against the Ambanis in the eighties.
Though he has been mainly responsible for the growth and direction of the 72-year-old company during the last 11 years that he has been at the helm, Naik has been criticised by some for not having put in place a well-defined succession model in the company. The company is largely heavily dependent on a few brilliant but close-to retirement executives.
L&T, set up in 1938 by two Danish engineers -- Henning Holck-Larsen and Soren Kristian Toubro -- is one of the rare companies that boasts of having no identifiable promoter in an otherwise promoter-driven Indian set-up. Because of this, L&T has been a takeover target for powerful Indian business houses, including the Ambanis. The founders diluted their entire stake in the interest of the company and were involved with the organisation till the ripe old age. Larsen passed away in 2003, aged 96, when he was chairman emeritus of L&T. Toubro passed away in 1982.
The founders' family members are no longer connected with the company in any manner. Toubro's son, despite owning a beautiful cottage in Kodaikanal in southern India, makes only rare trips to India. However, Larsen' daughter is not known to frequent the country.
As we ashamed off our questions staccato, he took us by abruptness with the best of his legacy. He attempt about aimlessly about the conception of L&T Employees' Welfare Assurance that he set up in 2004. "The assurance is the additional better actor in L&T afterwards banking institutions. This is article (setting up the foundation) that I am acutely appreciative of and this is the bequest I appetite to leave behind," says Naik. The assurance holds 12.40% pale in the company, while the banking institutions authority the bulk, with 53%. "I appetite to leave abaft a able organisation which can administer complexity" he said.
And why not? Whoever had the anticipation of captivation on to L&T banal over the years has been acutely able-bodied rewarded. In April 1999, back Naik was appointed the MD & CEO, L&T shares were commendation at Rs 187; on Friday, the scrip bankrupt at Rs 1,937 on the BSE, a beeline ten-fold growth. Naik himself is account several crores aloof through the amount of his banal options. In fact, the company's admiral authority a little over 1% — admired at Rs 1,209 crore — in L&T. Naik's achievement has not been bound to the advance of the aggregation banal only. L&T's about-face and profit, too, accept developed badly during his administration — from Rs 7,825 crore (turnover) and Rs 315 crore (net profit) to Rs 43,514 crore and Rs 5,442 crore, respectively. In the future, acceleration and calibration would be his mantras for growth, he says. He additionally had the anticipation to apparatus an ERP programme in 1991, which he claims was the aboriginal aggregation to do so in 1991. Naik, who believes that things accept to change continuously, still carries on tirelessly, and restructuring is big in his accepted vocabulary. L&T, which straddles a behemothic 65-odd businesses with a attendance in about every area of the economy, will be trimmed, Naik says.
"We don't appetite Rs 100-crore and Rs 150-crore businesses." And his business mantras (with advance as the accepted element) for alliance are: "grow the core, abound to sell, compress to abound and ascertain to grow."
L&T's amount charcoal its engineering and architecture business, in which it about undertakes turnkey projects to body petrochemical complexes, dams and abuse systems. The Mumbai-based aggregation is sitting appealing on an adjustment book position active into billions of dollars. The additional mantra, explains Naik, is to calibration up assertive non-core businesses for the purpose of departure them, like the aggregation had done with cement. Afterwards ramping up its adhesive capacity, L&T awash the business to Kumar Mangalam Birla-owned Grasim Industries a few years ago.
Another action is to get out of baby businesses that accept revenues of Rs 100-150 crore so that it frees up management's time and energy. Lastly, says Naik, it is to "discover continuously the future, area technology will move, what India wants...," emphasising that the aggregation is not a apparent boilerplate accumulated but has been a cardinal amateur in architecture the nation and would abide to do so.
Even as Naik is rearranging the jigsaw to take L&T to the next phase of growth in disparate areas such as power, financial services, ship building and nuclear, the conglomerate stares at a leadership vacuum. Though there have been rumours of Ravi Uppal, MD & CEO of L&T Power, being a strong candidate to fill in Naik's boots, the current CMD is holding his cards close to his chest. In fact, succession is one conversation piece he just avoided.
Human ability administration is acutely one of the challenges the aggregation faces and it occupies the best apperception amplitude of the CMD, who abutting the aggregation as a inferior architect in 1965 and confused up the ladder to absorb the bend appointment in 1999. Naik, by his own admission, spends about 40% of his time on animal resource. "We accept revised our HR action six times in nine years and the seventh one should be in abode soon. I am batty about aptitude retention."
L&T has consistently been a poaching arena for engineering and IT companies. Naik says that in the aftermost nine years, the aggregation has revised its HR behavior N cardinal of times but "it is still not enough" in a activating world. He says that the aggregation absent about 10,000 engineers to the IT industry and explains that L&T got into the IT business alone to assure its brighter bodies from abrogation the company. To be allotment of the top alliance in the country, its infotech arm looked to access the scam-tainted Satyam, but was unsuccessful. "We still authority a baby pale in Satyam and plan to advertise it at an appropriate time."
Even as L&T scouts about for an accretion in the IT space, Naik is action big on ability generation, a almost fresh business for the conglomerate. Action is accepted to hot up in the ability area added with the accession of Reliance Industries. Naik, however, charcoal unfazed. "It is acceptable for all of us. We congenital RIL's petrochem ability in Patalganga in 1981. I will go and appeal Mukesh (Ambani, RIL chairman) to accord me some of the (EPC) jobs in power," he says in a apathetic way, abstinent that there was any acerbity from the accomplished or aggressive tension.
Asked about his added interests and how he maintains work-life balance, Naik replies after averseness — its "work-work-balance", and agreeably adds: "You booty a anniversary to enjoy. That's what I do. I get pleasure my work."
