'My whole life has been L&T and nothing else': A.M. Naik

ANIL MANIBHAI NAIK, 81, the long-serving boss of Larsen & Toubro stepped down as non-executive chairman on October 1. He spent close to six decades at the engineering and construction company, overseeing its growth and expansion to a global giant. In an exclusive interview, Naik talks about his life at L&T, succession and his philanthropic works. Edited excerpts:

Q/ You were with L&T since 1965. Is there some emotional sadness about stepping down?

A/ Though on paper I have spent around 60 years, in the hours that I have spent―15 hours a day, seven days a week, and not taking a leave―I am about 120 years. But in one lifetime, L&T grew 92 per cent; what I inherited was only 8 per cent. In 25 years, I created a new L&T.

I am not sad at all. I am a very happy man. My father told me not to take anything from anybody, because that is a liability. But if you give, it is a pleasure. So, at this stage in life, I am in a process of giving. In 60 years, I have collected so much I do not want to go without giving. I feel so happy that we have a very good successor. I was never mentored. I got one week’s notice to take over. I have been mentoring SNS (S.N. Subrahmanyan, his successor) from 2011. And he became CEO in 2017. When I first saw him in 2006, he was only a joint general manager. [He went up] from joint GM to GM to vice president to senior VP to joining the executive board. I sent him abroad for a year while he was a director. I was backing up his portfolio as well.

I am not emotional because I have been preparing myself for the past 10 years. My whole life has been L&T and nothing else. My wife says she is a second wife; first wife is L&T. I have slept on the office table many times. Even when my wife was young. I have been devoted to L&T.

Q/ Your first employer was willing to pay you better. You also had an interview with Philips. Why did you choose L&T, that too for a lower level job?

A/ My ambition was to join L&T. I joined Nestor Boilers because L&T was interviewing only IIT students; one exception was VJTI (Veermata Jijabai Technological Institute in Mumbai). My father had left [Bombay] for the village and I went with him. He told me to go to Vallabh Vidyanagar [in Gujarat] and I went there. So I missed IIT. If I was in Bombay and my father had continued with his job, I would have gone to IIT Bombay.

I joined a small company, but that experience was just the right one for me to join L&T. When I made up my mind to move, I applied to 20 companies. I got interview offers from Phillips and L&T. Phillips was more for electrical and electronic engineers. I was a mechanical engineer. L&T would give me much better responsibilities. So I attended the interview and was selected.

At Nestor Boilers, I was being paid Rs800, as a workshop in-charge with 400 workers. General manager Gunnar Hansen of L&T thought I was overconfident. Earlier, E.T. Baker (who hired Naik) had offered me Rs760 as assistant engineer. Hansen made it Rs670, junior engineer and unionised category. I accepted the job because my dream was to join L&T and serve the nation. Money didn’t matter to me; even today, it doesn’t matter to me. I have never checked my salary slip in 60 years.

When I became CEO, I got a call from a headhunter in Hong Kong offering me a job at a multinational as Asia manager. I told him I was not looking for a bigger job. I asked him to meet me, as I needed lots of good people. He never came.

Q/ You did not take leave for 21 years.

A/ As a student, I hardly attended class. Professors used to think that I would fail, but I would finally come out fifth or sixth in the class. When I graduated, I said the student life is over, I was going into business life and that is a completely different story. I enjoyed working so much.

People used to ask me when did I relax? I would say when I worked. And then they would ask when would I get tensed? I would say if I had no work. I was given more and more responsibility. That kept me occupied and interested. And I just did not feel like going home.

Of course, my wife was there. She suffered a lot. Many nights I slept in office and she used to be worried. She had to sleep in the flat alone. I should have thought about what she was going through, was it really worth it. But, that is past. Basically, you have to enjoy what you are doing.

Q/ L&T’s strength was in engineering and construction. Over a period, it expanded into other businesses―from information technology to financial services. What triggered it?

A/ We started financial services in 1994. We were into industrial products―switchgear, petrol pumps, construction machinery. People who were buying these needed loans. So we had captive customers. It was not doing well, though. We changed the entire structure and the CEO. We also changed the profile of the business and we had 105 per cent increase in profit this year. Next year will be similar. And we have repaid Rs5,000 crore for non-performing assets. So the balance sheet is becoming cleaner.

Three years ago, L&T Finance share was hovering around Rs50-Rs55. It has now gone up to Rs130. I would not be surprised if it keeps going up, because from a wholesale finance company, we have become a retail finance company. We had only 20 per cent retail business. Now we have 80 per cent retail and we want to take it to 95 per cent, if possible 100 per cent. So it will be like a bank. That will be a tremendous progress in overall L&T Finance portfolio.

When I took over, I wanted to form a five-year strategic plan. I called it Project Bluechip. Later on, as the company did well, we changed the name to Lakshya. After we implemented the strategic plan, I saw that we had 60 per cent attrition rate in our IT captive unit. We wanted to automise the processes of the entire company. We were the first company in the country to buy enterprise resource planning system. People were leaving because we were paying them L&T salary, which was one-fourth of IT industry salary. We formed a company called L&T Infotech, transferred the IT people there and started paying them IT industry salary. That brought down the attrition to 40 per cent. But 40 per cent was still a lot. Then I found that everybody wanted to go abroad, preferably the US. So, I said I would start an IT company to stop the attrition, because it was hurting the rest of the company.

In August 2000, I went to the US for the first time and started meeting people whom I personally knew. I got the first [project] because the CEO was close to me. It was only $6 million. One and a half years later we got another one. Slowly I brought back some of the employees. Then I got the 16 smartest people from L&T, oriented them for three weeks and sent them to London, New York and California, and I opened 12 offices.

Q/ Defence manufacturing is an area largely dependent on government contracts. How do you see L&T’s future in this?

A/ There is so much talk about the Bofors gun. Our Vajra howitzer is much better than Bofors. We made 100 of them and hopefully we will get orders for 100 more.

I wanted to do something for the country using L&T as a platform, and defence was absolutely in the country’s interest. In 1950 we started nuclear, in 1975 we started aerospace, and in 1986 we started defence. Now we do about Rs12,000-Rs15,000 crore worth of business every year and are the biggest in the private sector. But the reason we are not able to get and do more is because the government keeps on nominating the public sector, and they don’t deliver for 8 to 10 years. The country is suffering.

Our urge was always to go into high-tech, and defence was high-tech. Defence work has application in many commercial areas.

Q/ When did you zero in on S.N. Subrahmanyan as your successor?

A/ SNS knows engineering and construction contract (ECC) inside out, as he came from there. I met him first in 2006. I met him because G.M. Rao (of GMR Group) wanted to build the Delhi airport. And he told SNS, who was doing selling, marketing and business development, that he wanted to see the chairman. I went and I could make out that the project would come to us. After that there was no looking back. When GVK wanted to make the Mumbai airport, they called me along with SNS.

Earlier, it took years to get promotions. But I changed that by bringing in meritocracy. At that level you cannot be fooling around with seniority. Two people were a little sad that they were not getting a chance. But, I pumped them up and they have wholeheartedly accepted SNS.

Then I gave him additional responsibilities. In 2015, I sent him to the US for a year. As soon as he came back, I made him vice chairman. In 2016, we made him chairman of Hyderabad Metro and chairman of our defence shipyard near Kattupalli. After that, I went to the board saying that I had been watching this man for 10 years and mentoring him. I told the board my choice was SNS. The board agreed. In 2017, he was made CEO. I don’t think there are many such competent people in the industry.

Q/ How do you see the future of L&T under his leadership?

A/ It is [only] a matter of time that we make Rs3 lakh crore [turnover]. Now, we have got one high-speed rail job, which is worth Rs26,000 crore, and we are going to get a large job overseas that no one has ever dreamt of in India.

Q/ You have for long batted for reducing imports and making in India. Do you think the environment today is conducive enough for industry and investment?

A/ Over time, the government was vociferating that no private sector, only government sector. So we didn’t get any job. Pioneering work was done by L&T in the nuclear sector. But the government gave away projects to BHEL. When BHEL failed, they brought L&T back after 10 years. Now again BHEL is lagging behind by five to seven years. Those were the days when I might have gone 30 or 40 times to convince secretaries that if you want to create a nation with power, you have to take everyone with you and make competitive bidding.

Q/ What next for you?

A/ The L&T Trust, which owns L&T, and L&T, which manages L&T Group, are two different pillars. I am still the chairman of L&T Trust. So, I am just stepping aside. I am also the chairman of the IT and engineering services till next July. I have a timetable. Next year, I will give away both. I will continue as adviser for two years. I am the (honorary) Consul General for Denmark. But, I have said by 2025 March, I am out.

Q/ You run charities in health care and education. Will that take up more of your time?

A/ My son is in Navsari. My daughter-in-law goes to the school and hospital every Saturday. My sister’s daughter looks after education and skilling in the rural parts and health care is looked after by my son. My sister’s grandson has shifted from Mumbai to Navsari. So, I have good pillars now. I still sanction money and sign off on payments. Some day, my son will do that or whoever is the most competent will. It could be my daughter-in-law or niece or son. But, that time has not yet come.