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Larsen & Toubro, which recently acquired majority share in Mindtree, on Monday said the IT firm will be run as a separate entity and operate at an arm’s length from the construction major’s own tech units.
Last week, L&T was categorised as a promoter of Mindtree, having acquired 60.06 per cent stake in the company.
Mindtree co-founders and board members Krishnakumar Natarajan (Chairman), Rostow Ravanan (CEO), and Parthasarathy NS (Vice-Chairman) quit the company on Friday. The development saw Mindtree shares falling 10.43 per cent to close at ₹773.95 a piece on the BSE on Monday.
L&T will focus on “continuity” as a key theme in the management transition, and the announcement on a new chief executive for the IT services firm will be made in due course, L&T’s CEO and MD SN Subrahmanyan said.
“Mindtree will be run as a separate entity, distinct from L&T Infotech (LTI) and L&T Technology Services (LTTS). The entities would run at an arm’s length. It is inappropriate to speculate about the future structure now,” Subrahmanyan said in an emailed statement.
Subrahmanyan noted that LTI 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 clarified.
He said a council would be formed at an appropriate time in the future, so that the best practices of one company can be adopted by the other.
L&T’s takeover of Mindtree marked India’s first-ever hostile takeover in the IT space. The infrastructure giant bought 20.32 per cent shares in Mindtree from VG Siddhartha and his coffee enterprise for over ₹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 per cent stake, taking its shareholding to over 60 per cent.
Last month, L&T had secured three board positions at Mindtree, bringing in Subrahmanyan, Jayant Damodar Patil and Ramamurthi Shankar Raman.
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