AM Naik's legacy: The L&T transformation story

Six days ago, Morgan Stanley took a bullish stance on India, placing it on the numero uno spot among the Asian emerging markets. Simultaneously, it upgraded India from the "equal weight" category to "overweight". The reason? Two bigwigs - L&T and Maruti Suzuki. And while Maruti Suzuki has always been a market dominator, the story of Larsen and Toubro's transformation is a rare find. 

In FY14, L&T had a consolidated net worth of Rs 37,692 crore. Today, with an uptick of 135.75 per cent, this figure stands at Rs 88,859 crore. During this time, the consolidate Sales Turnover went from Rs 85,128 crore to Rs 1,83,341 crore, recording a dip only in one year - FY21 owing to the pandemic. Meanwhile, its consolidated Profit After Tax (PAT) was at Rs 4,902 crore in FY14, before recording a dip in FY15 and FY16, and then skyrocketing to Rs 11,583 crore in FY21. For FY23, this figure stood Rs 10,471 crore, an increase from the Rs 8,669 crore PAT it clocked in FY22. 

10-year financials of L&T | Credit: larsentoubro.com

The man of the hour

This robust trajectory of the conglomerate has been closely seen by the Group Chairman AM Naik, who has worked with L&T for nearly 60 years. The 81-year-old stalwart is set to retire from the group in September this year, but his 20-year tenure as the head of the group has seen a shareholder value boost that the group credits to Naik. The company states that his leadership has caused a "remarkable increase in parameters of business performance", be it market capitalisation, consolidated turnover, or net worth. It was also Naik who oversaw the restructuring of L&T to deliver aggressive growth. 

Diversifying the portfolio that L&T catered to, he became the flagbearer of indigenisation of the manufacturing process in defence as well as process industries.

He consequently emerged as a man of national importance, evident by the fact that Prime Minister Narendra Modi appointed him as the Chairman of the National Skill Development Corporation from November 2018 to April 2022. 

He is also the recipient of the Padma Vibhushan, conferred to him in 2019. 

What led to L&T's rise?

With a government push for infrastructure development, L&T is delivering in both segments. In the annual statement for FY23, Naik said, "The company has performed well and continues to excel in the areas of infrastructure, hi-tech manufacturing and tech-driven services."

In the same annual report, the group shared that it created a building infrastructure of 21 million sq ft, while bridges and tunnels to the tune of 45 km were delivered. When it comes to power infrastructure, transmission lines amounting to 2,545 km were laid and solar power capacity of 484 MWp was created. 

Moreover, the group's expertise in building airports, statues, hotels, stations, warehousing facilities, and IT parks come in handy as these sectors are witnessing an aggressive push from both private players and the government. Roads, bridges, elevated corridors, railway projects, mass transit systems, tunnels, ports, nuclear power plants, weapon delivery systems, and smart cities are all areas where the government is actively working and L&T, the apex infrastructure development firm in the country, is at the centre of this rapid development. 

Also, L&T's decision of geographic expansion has led to increased profitability. "While the Middle East region remains an area of focus for the projects businesses, the company has expanded its outreach to new markets in Africa as well as Southeast Asia. Currently, the Middle East region constitutes 87 per cent of the international Order Book of Rs 1,11,779 crore," Naik shared in the annual report statement.