Fifty-eight years after he joined Larsen & Toubro (L&T), AM Naik will address the company shareholders for the last time at the annual general meeting on Wednesday. Later in September, Naik will also step down as the Chairman of the Group he saved from hostile takeover bids in the late-1990s. The son of a school teacher who overcame odds to transform L&T into a global powerhouse spoke with businessline about his illustrious career and his expectations from future leaders.
As you exit the company, are you happy with where it is today and what will you do after you move out of L&T?
I am quite happy. The company is doing well under S N Subrahmanyan (SNS). For nine years, I have mentored him. Even now, I am mentoring different groups. For example, there are 40 people in the age-group of 35-42 whom I am mentoring. They will be ready to take up leadership roles by 2032. So although I am moving out, I will continue to be an advisor to L&T with a focus on creating future leaders. That’s where I have been spending time for the last many years and will continue to do so, going forward.
Would you have done something differently?
On the business side, not much, perhaps nothing. But I worked 15 hours a day, seven days a week. I did not take any leave for 21 years. When my daughter got married, I took just one day off...maybe half-a-day. So the only thing I would have done was spend a little more time with my family. My children also sometimes feel that they could’ve had more from me. Today, we have so many tools and technology that one need not slog as I did. One can do a little less now to achieve the same result. However, I think construction and infrastructure building is the most difficult job in the world.
How difficult will it be for you to step away from a company where you have spent a lifetime?
I plan way ahead. I am involved in philanthropy work through my two trusts. I’m very interested in this. It actually took me back to my village where I have set up hospitals and educational institutions. So I am quite busy with the mentoring that I do at L&T and then giving back to the community through my not-for-profit trusts.
You are one of the few professional-entrepreneurial leaders. Are you confident that your successor will have the same zeal?
I think he will do his best to do it. I tried to make most of our managers think like a leader first with a touch of entrepreneurship. If you are an entrepreneur-leader with a professional background, you can multiply value.
There are a number of new entrepreneurs coming through the start-up ecosystem. Do you see any difference between the way they operate and how you led L&T?
This is a problem in this country because the new generation are largely in the marketing and sales, consumer products, consumer durables space, finance, 5G etc. But hardly any one have gone into infrastructure building.
What do you think is the biggest challenge for L&T today?
Talent retention is the biggest problem. Because everybody in the industry sources people from L&T, but we can’t hire from them because they are not up to our standards. So last year and the year before, our attrition rate was 22-23 per cent. So if our best people are gone, then we will have a serious problem sustaining profitable growth.
Tell us something which people in general do not know about you.
You will perhaps be shocked to know that I have never ever used a credit card. Neither have I used any of the new digital payments like UPI. I have relied on cash or cheques. Another thing I will tell you, I have never seen my salary slip.
Of all the businesses under L&T group, perhaps the NBFC business has not lived up to its expectation. What is your view on its future since L&T has exited most of the non-core businesses?
There are three very successful NBFCs in the country, some of which have higher market cap than L&T. I blame the earlier leadership of our NBFC business for taking wrong decisions. They went after the wholesale business and were funding some of L&T’s rivals. I knew that these companies would never pay back and I also advised them. But lower down the company, it was felt that this was being said because L&T doesn’t want to compete with those rivals. See what happened in the wholesale business over the last few years. If we had run it like a Bajaj Finance, today the NBFC’s market cap would have been equal to L&T. Going forward, even though it may be non-core, in my view it has a bright future. Fifteen months ago, I called the Chairman of the NBFC business and told him that the management is getting anxious and they wanted L&T to take more active interest. I told the then Chairman to resign and appointed SNS to take over the NBFC business. This year’s profit was doubled and next year it will double again. I am confident that two-three years from now, the NBFC business profit will be over ₹2,000 crore.
There seem to be a lot of corporate governance issues coming out of large companies. Whats going wrong?
This seems to be an issue largely with promoter-driven companies. If you look at MNCs or Indian companies like ITC and L&T, there are no problems. Some promoters take short-cuts. They don’t pay tax, but they become billionaires.
How do you see the opportunity ahead for India ?
Time is good for India but unfortunately, when the world is looking for a China+1 policy, the Western world still doesn’t think that India is right for them. So they are going to countries like Vietnam. However, I think this is the best time for India not just for manufacturing but everything. But we need to start doing instead of just talking. India should grow in double digits like China did. If China can do it, why can’t we do it? One reason for that is all the negative news thats shown in media. Young people are seeing that and thinking this country is not worth living.