The CEO of L&T, SN Subrahmanyan (SNS), and CFO R Shankar Raman (RSR) say Mindtree has a path to grow faster under its umbrella and are confident that better sense will prevail. “We had anticipated some negativity. I hope people realise what they have done is not right, especially Mr Bagchi. We have bulldozers, we have cranes, we make things that make the nation very proud,” Subramanyan told ET in an interview. Excerpts:
Mindtree founders are not seeing your move positively. Krishnakumar Natarajan has raised concerns about differences with L&T in a mail…
SNS: When VG Siddhartha approached us to sell his stake, we realised that if we don’t show interest, someone else will. This is what we told Krishnakumar Natarajan and Rostow Ravanan. We had a good meeting with the promoters. You should ask Krishnakumar (KK) about the mail. The discussion we had was always about how the management and staff will be treated, what we can learn from each other. Nothing else. We will reassure management and staff that we are coming as an investor and the idea is to keep it (Mindtree) separate. Time will soothe things out and they will see reason. I spoke to KK today and he sounded positive. He asked me when I would visit him for dinner and I said whenever he cools down. He attended my son’s wedding last week. Apni taraf se pyaar hee pyaar hai (We only have love.)
RSR: The money we are putting is 3-4 times their net worth. Nobody will put that kind of money to destroy the company. It defies logic.
Have your engaged with Mindtree’s institutional investors and customers?
RSR: We have not yet engaged with institutional investors. Many of these investors are also L&T shareholders. They are known people. SNS: From the data that we have, there are hardly one or two clients that are common between L&T and Mindtree. We believe that almost 90% of those who are not our clients would know us and they would be comfortable.
‘#MindtreeMatters’campaign on social media was negative and cofounder Subroto Bagchi has openly attacked the move…
SNS: We had anticipated some negativity. I hope people realise what they have done is not right, especially Mr Bagchi. We have bulldozers, we have cranes, we make things that make the nation proud. We make submarines, rockets, missiles and guns. We are operating at a different scale altogether. He should have not made those comments without knowing who is the benefactor and who is the protector. We are high on governance and high on principles. We are a national company.
Mindtree will be the third IT company for L&T. How does it help ?
SNS: L&T is 75% engineering and construction, 5% manufacturing that includes defence, and 15% services, which includes IT, finance and real estate. EPC and construction gives us 5-6% profits on a good day. Services businesses make 15-16% profit after tax. So it’s a no-brainer . In IT, we were making small acquisitions, but this opportunity came our way. RSR: We must allow the businesses to grow. L&T Infotech and Mindtree are both sub scale. There is enough headroom for growth.
What has been the response of L&T shareholders?
RSR: We had shareholders’ call today and and they wanted to know about value accreditation. There was no question as to whether we can afford it. L&T is like a classic balanced fund.
Source: Economic Times