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SPARK OF THE CORPORATE

I would like to see Indian corporates as the world's best...

One's forebears, and hence the aura surrounding the family's involvement -in everything from their vocation to social attachment- often shape the make-up of one's personality. One of the scores of personalities born out of such lineage is Anil Manibhai Naik (AM Naik), the Chairman of India's largest infrastructure and capital goods company, Larsen & Toubro Limited. And, if serving the nation by all possible means runs in their blood-line then such descendants have a profound bearing on the destinies of thousands of their fellow countrymen. That is exactly the case with Naik, who has been with L&T for more than four decades now, through which period he has master-minded its humungous growth - it was started as a ship repair company that imported equipment from Denmark, by two Danes with funds provided by an Indian businessman, N.M. Desai- with Naik himself creating 60% of its business from scratch, to become a multi-billion dollar ($ 13 Bn) MNC with a very strong and deep-rooted national character in everything it undertakes. So much so, that many mistake it for a PSU!

Early Days

Naik was born (June 3, 1942 at Endhal, Gujarat) into a family of freedom-fighters who were teachers by profession. His father, who had moved to Mumbai in 1944 and taught mathematics and science, was a known Gandhian with an obviously acute sense of social responsibility, a trait which would pass onto to his children (Anil was third child born after two girls), more so his son. Thus the inspiration for Naik to serve the nation in some capacity or the other sprang at home from his father, who has remained his inspiration and the driving force behind all his actions and thoughts even today when he is 70.

One day in 1952, the socially inclined teacher-father of Naik, who had been teaching at the Hansraj Morarjee Public School at Andheri (Mumbai), one of the best schools in those days, decided to go back to his native place Gujarat and do his bit for the society. Naik had just completed his fifth standard by then. The move back to Kharel (Surat Dist., Gujarat) came as a difficult change to adjust for the young Anil, who had been living hereto in Mumbai and, understandably, he did initially miss the comforts and attractions of city life.

But he quickly got accustomed to life back in the country-side where, for generations, his ancestors had held the cause of the society above self. He proved to be a bright student and went on to pursue a mechanical engineering degree from the Birla Vishvakarma Mahavidyalaya Engineering College in Vallabh Vidyanagar. However, there was one problem: he wasn't all that good in English since there wasn't much focus on the subject during schooling excepting, to some extent, on grammar. This proved to be an impediment for the otherwise brilliant young Naik when it came to applying for jobs and facing interviews. Out of his own admission, he would, invariably, think about the reply to a question (or even when trying to converse in English) in Gujarati and translate it into English.

The Spark

The spark that helped Naik race to the top of one of India's most-respected conglomerates, which is among the very few professionally-managed, board-run and widely-held companies in a $1 trillion economy had, as we have seen, always been there right since his childhood. But, it is difficult to pin-point one particular event or factor that has propelled him to the zenith of his career at the one company he has been with for the last 47 odd years. For, he had always had the traits - hard work, leadership, ambition, and shrewdness. And with a bit of luck coupled with enormous amounts of energy and perseverance he was already industry-ready by the time he arrived at the Kurla office of Mukand with a letter from his father to Viren Shah (Promoter / owner of the company, who later went on to become the Governor of West Bengal). A member from the personnel department at Mukand, after reviewing the application form Naik had filled, advised him to do something about his English if he were to succeed in his career.

Naik took this piece of advice from the gentleman and enrolled for spoken and written English classes which, it has to be said, helped him in later years to quite an extent. Being an L&T-ite had always been at the top of the mind of Naik even while he studying mechanical engineering, for some reason he thought the company's growth would inevitably mean helping the cause of the nation. But, there was a big problem in that - back then L&T only hired engineers from the IITs. He joined Nestor Boilers in the interim while waiting for the unlikely chance that would get him to his preferred company. Although he managed a team of about 350 from the initial 40 or 50 that reported to him at Nestor, he was soon disenchanted with it -mainly owing to a change in ownership which inevitably meant a change in the management style which according to Naik, was peremptory and arrogant. Luckily for Naik, two opportunities presented themselves at this crucial juncture of his life. One from electronics manufacturer, Philips and the other from L&T - the company which he had been yearning to join for quite some time. He applied to both, and his application was short-listed at both the companies. In fact, even the interview at both the potential employers was scheduled for the same day. There was a hitch though. His interview with Philips was scheduled to be conducted at Pune, while that of L&T was just across the street in Mumbai. He chose L&T over Philips.

As luck would have it, Naik found a person at L&T who was very well-disposed toward him despite his (Naik's) obvious discomfort with English. This was Mr. Baker. After the interview, Mr. Baker informed the young and bristling-with-confidence engineer that he would be recruited as assistant engineer and given a monthly salary of Rs. 760 if he got through the next round and final round of interview, which was with Baker's boss, Mr. Hanson.

This rendezvous with Hanson at the Powai office of L&T can, to a certain degree, measure up to be the spark that defined the career of Naik and the next fourty-odd years at L&T. Naik's interview with the stern and serious Hanson went about in business-like fashion after which he was made a slightly discounted offer. This was, in Naik's own words, perhaps because Hanson thought of him as being over-confident owing to a misunderstanding resulted by his then weakness, English language.

All was not lost for Naik though. The contentious point which led Hanson to think of Naik as an over-confident fellow was his reply to one of Hanson's observations of the task ahead of Naik at L&T. Hanson had suggested that at L&T he would have to wait for a long time before he can get to manage a team of 350 people like he did at Nestor, which Hanson thought Naik was incapable of at that point in time. The reply was "Who knows, time will tell," in his own Gujarati-to-English transliterated style.

Over-confident though he may have sounded, but there was no denying the fact that Naik was talented, skilled, and ready-enough to become an L&T-ite. Hanson did not miss this point, and recruited Naik for a lesser salary than promised earlier but with the incentive that if he did well, he would get what was offered initially. More than the promise of an increased salary, it was the added-incentive or in Naik's opinion back then, a rider, that spurred him on. And in about one-and-half-years from his appointment date, Naik was made the in charge of an entire workshop with 800 people reporting to him!

The Journey Thereafter

Naik had joined L&T on March 15, 1965, and rapidly grew in both position as well as stature until the summer of 1974. He became the youngest production manager in the history of the company (much later he would also go on to become the youngest general manager). This was when the company's control and management was handed over completely to Indians. The period from 1974 to 1986 is described by Naik as the most stagnant phase of his career at L&T. During these 12 years, as opposed to a merit-based performance appraisal and promotion process, a system of promoting senior over others became prevalent. As a result, Naik's as well as scores of others' very good work for L&T that made them worthy enough of promotions better than they were handed (Naik was made deputy general manager in 1974 and then joint general manager in 1979), was just glossed over. However much this may have irked Naik, but he it wasn't good enough to ruffle him up and force a decision that would lead to his exit from L&T.

There were two reasons for this. One was obviously his social inclination, which leads to the other factor i.e. the strong belief that L&T was the company that will provide him with the best opportunities to serve the national. L&T gave him the best opportunity to exploit his skills as an engineer and also work for what was good for the country - which meant that he was too devoted to the organization to even think of anything else, much less moving on. In fact, but for these challenges and freedom of work, action and empowerment at L&T, Naik would not have stayed.

So, he stuck around, with much more than determination and conviction than ever before. He put in extra hours, and went about his work with an all-consuming passion that is so rare in managers nowadays. Although he appeared like he was policing the work stations where earlier workers took their job for granted, with Naik around they had mend their ways. Slowly but surely, he made way into their hearts and minds and own them over with a personal touch - caring about their families and sharing their concerns, doing his bit, if he could, to address them. Then in 1986 he was elevated to the post of general manager.

He then became a director on the board in 1989 and went on to become President of operations in 1995 upto 199 when he became the CEO, and eventually becoming its chairman in 2003, a post he has held since then.

Naik always knew that pay-scales, or rather the pay-hike criterion at L&T, which was devoid of the so-called meritocracy, would drive away the wealth of engineering talent that L&T had been able to attract and nurture. This also meant that there were corporate giants who would sense this one weakness and try and take-over the company. This, according to Naik, was unacceptable to anyone who had been with L&T for so long. Primarily because such an event would mean compromising with the independence that L&T enjoyed to be able to do what it did for the country.

So, when he became the CEO in 1999, he made an action program of 90 days and put forth my vision for the next five years. The first thing he did was to bring back the merit-based system and changed the system of rewarding employees, since L&T management's biggest task had been to attract and retain the younger generation. The first two years of transformation were painful, because the economy was in a horrible shape. Since he wanted the new strategic plans to be accepted by all the employees, he started a large-scale interactive process. That is when he also brought the concept of employee-ownership at L&T i.e. the employee stock options scheme was put in place.

Naik's efforts towards restructuring the company in 2003; demerging the cement business and setting up the L&T Employees Welfare Foundation — all of which have resulted in a stronger L&T and preserved its unique character. The process of demerging or divesting some of the group companies that he set in motion resulted in unlocking immense value for the hundreds and thousands of its share-holders. After 2003, when he became chairman, the company diversified it presence in various allied areas of the construction and engineering sectors from infrastructure - brides, roads, metros, airports, seaports, to cement, power generation (hydel and nuclear) and project financing , as indeed expanding its operations or atleast its presence to frontiers outside India.

But, there still lingers at L&T. Naturally, the problem of succession also loomed large at L&T where about more than 200 senior managers have been working, like Naik, for decades together and the succession plan hasn't fructified so far. What compounds it further is the inability of L&T to attract young talent, and retaining them as either they are driven away toward high-paying IT sector or are poached away later.

Philanthropy

Much has already been said here about how Naik's ancestors, the 'teachers family,' as they were called, had been working for social development besides participating in the freedom struggle - his father took part in the Quit India movement prior to moving to Mumbai-, educating people, creating awareness amongst the masses and such like. This facet of the family was, obviously, never lost on Naik. So, when he rose to a position of actual power from where he could devote his energy and resources for the betterment of society, he got involved with as much the same enthusiasm, dedication, and passion as he did when working with L&T.

Thus, it isn't any surprise that a concern for social and welfare issues complement Mr. Naik's keen business interests. He has provided both monetary assistance and management expertise in setting up educational institutions and a hospital in Gujarat. He is now the Chairman & President of Kharel Education Society which runs a high school with the latest education facilities.

He remains deeply committed to social causes, and under his leadership, L&T has embraced the platforms of health and education as a part of its commitment towards creating a more equitable community in and around the company's facilities. Many initiatives have been undertaken to address some of the teething problems of the under-privileged rural communities. Some of them are health-care through the use of state-of-the-art equipment at L&T's welfare and factories, psychiatry, counseling, immunization drives, mother-and-child-care, HIV/AIDS awareness to name a few.

Further, he was instrumental in the establishment of the Larsen and Toubro Public Charitable Trust, which conducts skill training at several locations around the country. In addition, L&T runs construction skills training institutes for the underprivileged.

Acknowledgements

Naik's all-round capabilities - business acumen, sense of conviction, sensitivity toward the work force, demonstrated thought-leadership, and dynamism have made people take notice and, importantly, make best use of them. He was nominated as the Co-leader of the India-Malaysia CEOs Forum, by the Ministry of Commerce and Industry, Government of India. He is a senior and active member of the Confederation of Indian Industry (CII) National Council. He has contributed several innovative ideas to promote Capital Goods Industry in India and abroad.

Not only that, Naik also led the Indian industry's delegation to the 17th Congress of World Energy Council held at Houston in 1998. Besides that, he is a Member of the Board of Trade, Ministry of Commerce, Government of India, Fellow of the Indian National Academy of Engineers (INAE), and Member of the Board of Governors of the Indian Institute of Management, Ahmedabad.

Further adding to his glory was his appointment as Knight of the Order of the Dannebrog by the Queen of Denmark, Her Majesty Queen Margarethe (Mumbai on February 25, 2008).

Awards and Accolades

His efforts for both the Indian industry as well as the society in general were widely appreciated and recognized through the various award and accolades conferred on him. Some of them are:

*Appointed as Chairman of the Society & the Board of Governors of the Indian Institute of Management, Ahmedabad - India's most prestigious business school. (February 27, 2012)
*Rated as one of the top two of India's Best CEOs in a study conducted by India's leading business magazine Business Today (part of the India Today Group), leading international business school - INSEAD, and the Harvard Business Review. (January 19, 2012)
*Conferred a doctorate - 'Doctor of Letters' (Honoris Causa) by the Sardar Patel University (Vallabh Vidyanagar in Gujarat, India). (December 15, 2011)
*Awarded the inaugural Business Courage Award - 2011 presented by the Asia Business Leadership Forum (ABLF) for his contribution to the Asian business-scape. (October 11. 2011)
*Ranked the 'Best CEO' in the Industrials segment in Asia in the All Asia (excluding Japan) Investor Relations Perception Study conducted by the prestigious Institutional Investor magazine. (July 14, 2011)
*The Mumbai based CHEMTECH Foundation conferred on Mr. Naik its prestigious Hall of Fame - Leadership & Excellence Award 2011. (February 24, 2011)
*Awarded the prestigious Asia Business Leader Award for 2010 by CNBC Asia for his exemplary business leadership. (November 26, 2010)
*Awarded the Golden Peacock Award for Lifetime Achievement in Business Leadership from the Institute of Directors (November 13, 2010
*Prestigious Harish Mahindra Memorial Award for outstanding contribution to Corporate Leadership. (September 20, 2010)
*'The Special Award for Business Leader of the Year - Building India by NDTV Profit - one of the most respected TV channels in the country (September 7, 2010)
*'OceanTEX Business Leader of the Year' Award from CHEMTECH Foundation (March 04, 2010)
*'Best CEO of the year Award' from the Indian Society for Training & Development, Bangalore (February 13, 2010)
*Qimpro Platinum Standard - National Statesman Award for Excellence in Business by the Qimpro Foundation. (February 10, 2010)
*Lakshya Business Visionary Award from the Mumbai based National Institute of Industrial Engineering (NITIE). (October 26, 2009)
*The Bharat Shiromani Award for his outstanding contribution to Indian industry. (October 01, 2009)
*The Padma Bhushan from the Government of India (March 31, 2009)
*'Business Leader of the Year' Award from the Economic Times. (January 21, 2009)
*The Gujarat Garima (Pride of Gujarat) Award from the Government of Gujarat. (January 13, 2009)
*The 'Transformational Leader Award - 2008' from the Indian Merchants' Chamber and the Asian Centre for Corporate Governance & Sustainability. (November 27, 2008)
*The E&Y Entrepreneur of the Year Award from Ernst & Young. (November 21, 2008)
*V. Krishnamurthy Award for Excellence by the Centre for Organization Development, Hyderabad. (July 8, 2008)
*Outstanding Chief Executive Award from the Indian Institution of Industrial Engineering. (November 12, 2005)
*The 'Management Man of the Year' award from the Bombay Management Association. (July 26, 2005)
*Sankara Ratna Award 2004 from Sankara Nethralaya, India's foremost Medical Research Foundation in eye care services based in Chennai. (February 21, 2005)
*Lifetime Achievement Excellence Award for Best Corporate Man of the Decade from the Foundation of Indian Industry & Economists. (December 01, 2004)

Quotes

*"An L&T man is sought after by other companies, especially multinational companies coming to India."
*"The mindset in India continues to remain focused on Indian benchmarks. I would like to see Indian corporates become not only as good, but even better than the best in the world."
Hope viewers caught up the spark...
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