L&T or commonly referred to as, Larsen and Toubro (1) is the Largest biggest technology, engineering conglomerate. With a staggering 21 Billion USD revenue, their contributions and success are unparalleled. L&T is responsible for a percentage of industrial work on the planet and has made the finest and brain cracking engineered structures. Connecting with India and the world, L&T plans to develop a sustainable workforce that is specific to the ‘Make in India’ movement.
Chairman of L&T, AM Naik said in their 75th Annual General Meeting, that they wish to bring in multiple reforms to the way the company functions in India. Supporting Prime Minister Narendra Modi’s vision and mission, they want to create an environment where they can survive in unison with the Government. He also phrased upon the dynamic changes that India will have to make at a time where India’s Industrial Growth is very weak when compared to China’s overall Industrial growth over the years.
The level of incompetency that India’s Material Industry has when compared to China is what fears L&T’s management system and how they’d progress with Modi’s Ideology that would require years in the process. He introduced the reforming principle to instigate the instantaneous financial change in tandem with the process that L&T wants to create in the next 12 years. To improve the situation and to leverage the trends for their production process, they intended to approach certain time-bound implementations for better achievement. With the improvement in engineering, nuclear and other ventures, the conglomerate is very interested in improving the situation infrastructure in the country for the national cause and thus, the modus operandi was to take over operations that will approach their benefit.
The MINDTREE takeover
In late June of 2019, Mindtree (2), a WIPRO based software development company headquartered in Bangalore was taken over by Larsen and Toubro with a huge 60% increase in their stake and therefore confirming the country’s first-ever Hostile takeover. Earlier, Larsen and Toubro acquired a 29% stake in the software company with very less control over it, later the conglomerate decided to purchase an additional 31% stake in the company with currently a 51 million purchased share in the company, this, therefore, constitutes an effective control over Mindtree’s management system and board of directors.
The takeover came through many bids and proposals with the ex-holder of the stake, V.G Siddhartha, the owner of Café Coffee Day who had a 21% stake in Mindtree. The takeover marked a year-long effort to acquire the shares of the company and thus the Mindtree takeover was very hostile in nature. Many of the investors and promoter sin Mindtree weren’t impressed with the takeover. The shares of L&T were sold later for Rupees Thousand Approximately. By afternoon, the shares were at 118% percent and thus the stake was easily acquired. This made sure that L&T didn’t need to organize Annual general Meetings to change their members, but could just do the changes through a simple meeting.
It has been predicted that if Larsen and Toubro acquired all the required purchase targets then they can acquire a more sizable stake in Mindtree at 66% which estimates to Rupees 11,000 approximately. The acquisition of Mindtree helps Larsen and Toubro in analyzing scientific data that were outsourced to scientific organizations. L&T has been a huge user of technology and many more modes for their newest venture, “L&T Next” targeting business building with the latest technology. The company that has been in the engineering sector for airports and other huge structural plans has been generating a profit after tax of around 7-8%. THE Mindtree acquisition has only supported them even more in the accuracy of their projects.
Further L&T Acquisitions and Projects
The company said it had received many project perusals ranging at a range of 1500-2500 Crores. Claiming the contracts to be significantly prestigious to the status of Larsen and Toubro in India, their project includes the Narmada Dam Projects and the irrigation schemes across the country. Their further projects also involve transport and electrical projects for the rail system in Udhampur-Baramulla Railway Project.
The DRDO project involves their nuclear projects that L&T has invested in, to promote the Make in India initiative. With the efforts to build an industrial ecosystem where its investors, vendors, and partners can take part in the learning of the L&T processes and understand the growth of the company in India. L&T’s primary focus was always India and have tried to reduce the dependency of Foreign raw materials in India. Even though the combined cost of sale before the cost of production might stand at a Break-even point for L&T, they are trying to keep the flow and fulfill Modi’s promise.
India accounts for the majority of L&T’s world projects, the recent acquisitions of the Chennai market also keeps L&T at bay for getting their tenders approved by regional and state departments. The scheme of being a self-reliant country has been a boon to L&T to increase their status in the eye of potential projects and investors.