I am leaving, but I am still there,” said A. M. Naik, the departing chairman of engineering and construction giant Larsen & Toubro (L&T) Ltd, while addressing his final and the conglomerate’s 78th annual general meeting (AGM) on Wednesday.
S. N. Subrahmanyan, the current chief executive of L&T will be taking over as the group’s chairman effective 1 October, while Naik, a legendary corporate leader, will head L&T Employee Trust, which, with 14%, is the largest shareholder in L&T and will benefit the most from the special dividend of ₹6 per share, which was announced as a “parting gift” for the shareholders on the eve of Naik’s departure.
“I will be the chairman emeritus for L&T but I will be associated with the group as the chairman of the largest shareholder group (L&T Employee Trust) whose stake is worth ₹52,000 crore,” said Naik, who evoked mixed emotions during the AGM that reflects his widely-known closeness to L&T and somewhat his unwillingness to dissociate from the eight-decade-old group.
“You can take me out of L&T, but you can’t take L&T out of me,” said Naik while interacting with L&T shareholders in his 25th AGM as the chairman.
“It was nearly six decades ago that I first walked through the gates of L&T with an application in my hand and a dream in my heart,” said the 81-year -old, while emphasizing that it is the first time L&T is appointing a chairman who is not originally from the company’s Mumbai headquarters.
“We never looked for anyone beyond Mumbai office (to be the chairman). But, this time, we have chosen Subrahmanyan,” said Naik.
Responding to a veteran shareholder’s query on L&T’s plan in the rapidly emerging semiconductor space, Naik said, “We are already over-diversified, working in over 600 cities in the nuclear energy industry, aerospace, defence, IT, construction, and engineering services. Unless we have 10 SNS (as Subrahmanyan is fondly called), it is not enough to diversify into electronics and other spaces.”
L&T’s strategy is different from other Indian conglomerates such as Tata Group, Reliance Industries Ltd, Vedanta and Adani Group, who are keen to enter the semiconductor business as India seeks to curb dependence on China in the electronic equipment space.
Meanwhile, L&T will be looking to divest its non-core businesses. “We are looking for buyers for those businesses,” said Subrahmanyan.
The firm has also drawn a roadmap to compete with its peers in another fast-emerging business—clean energy.
The company, Subrahmanyan told Mint, will enter this space investing at least $2 billion in the company’s first green hydrogen project. “We will increase the capacity to 3 GW with additional investments subsequently,” Subrahmanyan said on the sidelines of the AGM. The company intends to have 2-3 million tonnes of green hydrogen and ammonia capacity with an investment of nearly $4 billion.
L&T is looking to buy up to 1,000 acres for setting up green hydrogen facilities, starting with the manufacture of electrolyzers in December.
“We have tied up with IOCL and ReNew Power. We have a technology tie-up with a French firm. Electrolyzers will be powered by using renewable energy from ReNew Power to produce green hydrogen at the Indian Oil Corp. refinery in Panipat. It will be extended to other IOCL refineries later,” said Subrahmanyan.
Indian conglomerates including Reliance Industries Ltd. and Adani Enterprises Ltd. too are in the process of building up large green hydrogen capacities with multi-billion dollar investments over the next 5-10 years as the world seeks a net carbon zero roadmap, especially from Asia that accounts for over 50% of the all the world’s carbondioxide emissions.