At the centre of Mumbai's Bandra-Kurla Complex lie two landmark buildings— ICICI Bank, the country’s largest private sector bank, and the National Stock Exchange, the nation’s largest bourse.
Both these structures have one thing in common. They were executed under the leadership of S.N. Subrahmanyan, engineering bellwether Larsen & Toubro’s present CEO and managing director, who was then in-charge of the company’s buildings and factories business.
Taking over the reins of L&T on the day when the landmark Goods and Services Tax (GST) came into being (July 1, 2017), Subrahmanyan has his task cut out.
Though, it would not be easy to step into the shoes of A.M. Naik, a visionary and an industry stalwart, Subrahmanyan is no pushover and enjoys total confidence of his mentor Naik.
On the day of Subrahmanyan’s appointment Naik had said “Mr Subrahmanyan is the finest among the many top executives I have mentored over the last few years.”
“Three years ago he was identified as the most likely leader to take on the role of CEO and Managing Director. Since then I have worked closely with him and engaged him in all aspects of L&T’s operations, going beyond his core domains of infrastructure and construction. He has a great work ethic and business acumen to take L&T to greater heights in the future. I have full confidence that under him, L&T will remain steadfast to its core values, fulfill the expectations of our stakeholders and continue to play a key role in building a stronger India.”
In response, Subrahmanyan had said “I look forward to jointly writing a new chapter for L&T along with our high calibre employees while ensuring that we continue to deliver value to our stakeholders. I am humbled and at the same time excited and confident to be at this role in L&T.”
Having worked with L&T since 1984, Subrahmanyan is no stranger to the work culture of the company. He is credited to have successfully set up the Ready Mix Concrete business for the first time in India; securing and managing EPC contracts for the construction of four major international airports at Bengaluru, Hyderabad, Delhi and Mumbai; receiving the mandate to develop the dedicated freight corridor in the country besides taking L&T’s construction division into the list of the top 30 global contractors.
The present and future of L&T
Subrahmanyan has received a solid foundation from his mentor Naik , who grew the market capitalisation of L&T from Rs 4,400 crore in 1999 to Rs 1,58,000 crore in 2017. Besides, L&T has grown its international business to the extent of one- third of its total business while simultaneously building infrastructure projects in India, contributing to the strategic sectors of defence, nuclear power and space research and creating the L&T Employee Welfare Foundation (which today holds 13 per cent of L&T’s equity shares helping in ring fencing the company and at the same time allowing employees a share in the company’s growth).
In FY16, L&T embarked upon a five-year strategic plan named Lakshya to enhance its return on equity (increase the rate of shareholder wealth creation). The plan emphasised on profitable growth, reduction in working capital levels and unlocking of shareholder value through divestments of non-core businesses such as general insurance. In addition, it sought to harness emerging opportunities in defence, nuclear power and smart cities, productivity improvements through digitalisation, besides monetisation of road, port and power assets within the plan period.
One year into the plan period, L&T has already exited the general insurance business and achieved improved profitability, logged in higher return on equity aided by reduction of net working capital levels.
Come October 1, 2017, Subrahmanyan’s mentor Naik would move to a non- executive chairman’s role in L&T but his counsel would still be available for three more years.
It remains to be seen as to how L&T implements its strategic plan over the next four years with the global economy being affected by protectionist policies, low crude oil prices and the Indian economy growing at about seven per cent despite demonetisation and the implementation of GST.
Timeline
1984: Joins L&T as Project Planning Engineer
July 2011: Elevated to the position of Whole Time Director on the L&T Board. Earlier, he held the designation, Sr. Vice President and Head – Buildings & Factories and Infrastructure Independent Companies. Elevation, a part of L&T succession plan.
September 2015: Appointed Deputy MD and President
July 2017 – Takes over as CEO and MD
