Mindtree Will Continue To Operate As Separate Entity, Says L&T CEO
There is no direct conflict between Mindtree and Larsen & Toubro Infotech Ltd. as "they operate in vastly different areas with a minimum client overlap", said L&T Chief Executive Officer and Managing Director SN Subrahmanyan, asserting that no position is sought to be disturbed at Mindtree and no changes are being contemplated.
L&T will focus on "continuity" as a key theme in the management transition, and the announcement for a new chief executive for the IT services firm will be done in due course, he said.
“Mindtree Ltd. will be run as a separate entity, distinct from L&T Infotech and L&T Technology Services. The entities would run at an arm’s length. It is inappropriate to speculate about the future structure now,” Subrahmanyan said in an email.
The development saw Mindtree shares falling 10.43 percent on Monday to close at Rs 773.95 apiece on the BSE.
"Continuity will be the key theme in the management transition... No position is sought to be disturbed at Mindtree, and no changes are contemplated right now. There will be a new CEO for Mindtree, the announcement about which will be done in due course," Subrahmanyan said.
The L&T-Mindtree takeover marked India's first-ever hostile takeover in the IT space. The infrastructure giant had bought 20.32 percent shares in Mindtree from VG Siddhartha and his coffee enterprise for over Rs 3,000 crore in March.
Later, it shored up its holding with more share purchases from the open market, before making an open offer for an additional 31 percent stake, taking its shareholding to over 60 percent.
In June, L&T secured three positions on the Mindtree board, bringing in Subrahmanyan, Jayant Damodar Patil and Ramamurthi Shankar Raman. Their appointments will be effective July 16, when Mindtree is scheduled to hold its annual general meeting.
Subrahmanyan noted that L&T Infotech offers services to sectors like banking, insurance, oil and gas, and manufacturing, while Mindtree's clients are in consumer packaged goods, retail, travel and hospitality and high-tech sectors.
"They operate in vastly different areas, with a minimum client overlap. There is hardly any possibility of a direct conflict between the two entities," Subrahmanyan said.
He said a council would be formed at an appropriate time in the future, where good ideas can be exchanged such that the best practices of one company can be adopted by the other.
"L&T is a professionally run company... Through our businesses at L&T, we have a huge network of client partner relationships and wherever possible, we build 360-degree relationships with customers. We have been able to leverage this to benefit L&T Infotech," he said.
"We are confident that we will be able to harness these relationships for the benefit of Mindtree's stakeholders," he added.