However, Naik is expected to remain influential in L&T affairs as he remains Chairman of the L&T Employee Trust, the largest single shareholder of the Rs 1.9 million company. While Subrahmanyan will be reappointed as chairman and chief executive officer, L&T sees no legal basis for appointing a CEO in his place. Subrahmanyam has seven years to serve as L&T’s board of directors as the retirement age for the chairman and chief executive officer is 70.
In a regulatory filing, the company said that Naik, who became CEO in 1999 and chairman in 2003, has decided to step down from his duties effective September 30. He added that he had been granted CEO emeritus status by the board. The octogenarian joins the list of long-time directors/contributors such as Ratan Tata, Adi Godrej and KP Singh of DLF, who have been appointed Chair Emeritus of the companies/groups they were part of. Although the law does not recognize the title of CEO Emeritus, he/she may be invited to the company’s board meeting without the right to vote.
L&T had restructured the leadership positions to extend Naik’s tenure. In 2012, the posts of chairman and chief executive officer were split, allowing Naik to remain chairman. Five years later, it reappointed Naik as non-executive chairman. He will step down from this post by the end of September. Widely regarded as the architect of L&T’s transformation, Naik will put his stamp on the company.
During his tenure, the market capitalization of L&T – which was founded in 1946 by two Danish nationals – rose from Rs.5,815 billion in 1999 to Rs.3.3 billion on Wednesday. Turnover and profit increased to Rs. 1.9 crore and Rs. 10,471 crore in FY23 from Rs 7,292 crore and Rs 471 crore respectively in 1999.
Naik also managed to fend off takeover attempts by Reliance Industries and Aditya Birla Group in the early 2000s, and conceived L&T Employee Trust by shielding the company from future takeover attempts. He also led L&T into new business areas, including defense and IT services.
A source said that while Naik is mentally agile, physically he has his ups and downs as would be the case for people his age. He wanted to reduce his commissions and focus on causes close to his heart, such as philanthropy, and this (resignation) is part of succession planning, the source added.