Best Of Mindtree Yet To Come, Says Chairman Amid L&T Takeover Bid
"The best of Mindtree is yet to come,” chairman Krishnakumar Natarajan said Friday, exuding confidence that the Bengaluru-based IT firm will deliver a double-digit growth in 2019-20.
Describing Larsen & Toubro Ltd.’s takeover bid to acquire a majority stake in Mindtree as an “unusual situation”, Natarajan said the IT firm is fully committed to "handling this issue in a manner that maximises value for all our stakeholders".
in their message to shareholders in Mindtree’s annual report filed with the BSE on Friday, Natarajan and chief executive Rostow Ravanan noted that the L&T-Mindtree takeover bid was pending regulatory approvals at the time of penning the message.
"Although the external environment presents a slightly worrisome picture...we are confident that we are better prepared to handle these uncertainties than ever before. We estimate that we will deliver a low-teen growth rate in FY20, along with a margin expansion of 100-120 bps," the chairman and the CEO said in the report.
Natarajan and Ravanan stressed on the importance of rigorous governance standards as essential ingredient to deliver sustainable financial performance.
"You (shareholders) have our unequivocal commitment to uphold the highest standards of transparency and governance in Mindtree," they said.
They also admitted that some aspects needed improvement, including improving current margin levels, which are currently below its expectations, and enhancing gender pay parity.
In March, L&T bought for Rs 3,000 crore 20.32 percent stake in Mindtree from largest shareholder VG Siddhartha and his firm Coffee Day Enterprises Ltd. Since then, L&T has steadily increased its holding in Mindtree to about 30 percent. On June 17, it launched an open offer for Mindtree at Rs 980 per share to buy additional 31 percent stake in the company.
The hostile takeover bid, the first in India’s IT industry, will see L&T end up with up to 66 percent stake in Mindtree for a total consideration of Rs 10,700 crore.
Also read: Dissecting The L&T-Mindtree Takeover Battle
In the midst of it all, Mindtree in April proposed a special dividend to shareholders, which—along with the regular dividend and tax components—would cost the company about Rs 530 crore.
On Friday, Mindtree shares fell 0.49 percent to Rs 968.90 apiece on the BSE while the benchmark Sensex shed 1.03 percent to end the day at 39,194.49 points.