K. Venkataramanan will take over as the Chief Executive Officer and Managing Director of engineering conglomerate Larsen & Toubro (L&T) from April 1, 2012. He will succeed A. M. Naik who will step down as Managing Director, but continue as Executive Chairman of the group.
The decision by the board of directors of L&T to bifurcate the position of Chairman & Managing Director brings to an end weeks of speculation regarding a successor to take over from Mr. Naik, 70, who has been at the helm as CEO and Managing director since 1999 and as Chairman and Managing Director since 2003.
Mr. Venkataramanan, 67, at present, President, Hydrocarbons and whole-time director on the company's board, is a chemical engineer from IIT (Delhi). He joined L&T as a graduate engineer trainee. He was elevated to the board as a whole-time director in 1995. According to Mr. Venkataramanan, “the appointment has come in at a time when there are opportunities in the long-term and volatility in the short-term. It is going to be a challenging period but we have a capable team.”
L&T undertook project ‘Lakshya' to simplify its portfolio and created 10 independent companies (ICs) and seven subsidiaries to bring focus, autonomy and accountability in functioning. While the project is still on, changes in the economic environment have necessitated L&T to undertake a mid-term review of the strategic plan which is now under finalisation. The Lakshya project will be completed by 2015. The search for a suitable MD & CEO started more than a year ago and was overseen by a high-powered non-executive directors committee which has one member on the board of each IC. The chairman did not participate in the selection process.
The board also decided to continue with Mr. Naik as Executive Chairman of the group for five years till he reaches the age of 75. The company's policy is that the chairman, executive or non-executive, will retire at the age of 75.
Mr. Venkataramanan will be responsible for the businesses of the company. Mr. Naik will focus on completing the portfolio restructuring, institutionalising the IC structure, mentoring and developing the leadership team.
On plans for L&T Infotech, the group's IT venture, Mr. Naik said the aim was to grow it to about a $2 billion business. “Over the last two years, the IT industry went through some stagnation. We will close this year at around $830 million and cross $1 billion next year.”
Asked whether L&T Infotech was looking to acquire Hexaware Technologies, Mr. Naik said, “There is news in the market that they have appointed bankers for a potential sale. We have not appointed any bankers. We look at every opportunity as an integration possibility.”
As a part of its succession plan, the board approved the elevation of Shailendra Roy as a whole-time director, with immediate effect. Mr. Roy is now Senior Vice-President-Power Development Business, Corporate Affairs & Corporate Initiatives. He is also a member of the Executive Management Committee of L&T. Before joining L&T, he was Managing Director & CEO of Bharat Heavy Plates & Vessels Ltd. (BHPV) from 2002 to 2004.