However, Naik is expected to continue to wield influence over L&T affairs as he will continue to be the chairman of the L&T Employees’ Trust, the largest shareholder of the Rs 1.9 lakh crore enterprise. While Subramanian will be revamped as chairman and MD, L&T sees no legal basis for appointing a CEO in his place. Subrahmanyam will have seven years at the helm of L&T’s board as the retirement age for executive chairman and MD is 70 years.
In a regulatory filing, the company said Naik, who became CEO in 1999 and chairman in 2003, has decided to relinquish his responsibilities with effect from September 30. It added that he has been given the status of chairman emeritus by the board. Persons above the age of 80 years would be in the list of directors/promoters for a long time e.g. Ratan Dada, Adi Godrej and KP Singh of DLF who have been appointed as chairpersons emeritus of the companies/groups they have been a part of. Although the law does not recognize a chairperson emeritus title, he or she may be invited to board meetings of the company without the right to vote.
L&T had restructured the leadership roles to extend Naik’s tenure. In 2012, it split the post of chairman and MD to allow Naik to continue as chairman. Five years later, it redesignated Naik as its non-executive chairman. He will step down from this post by the end of September. Naik, who is widely accepted as the architect of L&T’s transformation, will leave his mark on the company.
During his tenure, the market cap of L&T – which was founded in 1946 by two Danish citizens – grew to Rs 3.3 lakh crore from Rs 5,815 crore in 1999, as per Wednesday. Revenue and profit grew to Rs 1.9 lakh crore and Rs 10,471 crore in FY23. from Rs 7,292 crore and Rs 471 crore respectively in 1999.
Also managed to fend off takeover attempts by Nike Reliance Industries and conceptualized the L&T Employees Trust in the early 2000s to shield the company from the Aditya Birla Group and future takeover attempts. He also led L&T in new businesses including defense and IT services.
A source said, Naik is very agile mentally, but like people his age, he also has his ups and downs physically. The source said he wanted to cut down on his duties and focus on matters close to his heart like philanthropy and this (stepping down) is a part of the succession plan.