L&T gets new chairman; to sell glass unit

L&T’s board meetings and annual general meeting were being chaired by director S.S. Marathe in the absence of a chairman. In fact, at the company’s last AGM, some shareholders had raised objection to Marathe chairing the meeting and had demanded a full-time chairman.

L&T has not had an executive chairman since N.M. Desai retired in March 1989. Subsequently, Dhirubhai Ambani and D.N. Ghosh occupied the position in non-executive capacities. Naik is the first to have risen from among the ranks to the top position. He started his career as a graduate engineer, and took over as CEO and managing director in April 1999.

Naik’s selection was unanimous with his name being proposed by Marathe and seconded by Kumar Mangalam Birla among others. Naik was instrumental in the appointment of Boston Consulting Group (BCG) in 1999 to chart a future course for the company. BCG suggested the demerger of the cement business and the shedding of non-core businesses. But the most crucial phase has been the recent tussle with the A.V. Birla Group over the demerger of the 16.5 million tonne cement business which was settled in June this year.

Charting out his future plans for L&T, Naik said that the BCG plan was for L&T was in place till 2005 and the company would put together another plan till 2010.

Meanwhile, the L&T board has also approved the divestment of the glass container business, which has been hanging fire for quite sometime for want of a buyer. Naik said that there were two potential buyers and the sale was expected to be completed by the current fiscal-end. ‘‘We are clearing the decks for focussing on what we know best,’’ Naik said.

Naik did not specify the amount that the company would receive from the sale but indicated it would be less than Rs 100 crore. The money would be received by end-March or early April 2004, he said.

The employee trust, which will house the shares of L&T to be bought out from Grasim is expected to collect around Rs 12-15 crore annually as contribution from employees. ‘‘We have guaranteed tax-free return of 5 per cent on contribution to the trust. The response has been overwhelming as emotionally the company belongs to the employees,’’ Naik said.