AM Naik (76 years – Birth : 9 June
1942) , longtime head of Larsen & Toubro in its 73rd Annual
General Meeting asked marshals to throw out a shareholder for asking inconvenient
questions.
The question specially pertained
to construction of a Cancer Hospital in memory of his Grand Daughter Nirali at Powai Campus (Mumbai).
In short, personal dream over a
Listed Companies property.
Why blame owners of company when
they start foundations and name it over their family members.
What is unique, in
this case, AM Naik started as an employee , rose up and remained an employee. He
was not founder of Larsen & Toubro.
The question is will SEBI (The Securities and Exchange Board of India) take action on AM Naik?
I know we Indians are very
emotional and even though top management keeps chanting separate emotions while
taking decisions, they end up doing so themselves.
There is no doubt AM Naik is
highly philanthropic individual. The cause is very noble and beneficial to poor
people.
But there are some unanswered
questions:
- Did board members object use of Company land for personal philanthropic activity?
- Why AM Naik did not think of buying a plot elsewhere and construct a hospital over there?
- Why Powai and not Hazira, Ranoli, Coimbatore or Talegaon? Considering the land price in Powai and number of hospitals in Mumbai?
- Did the Shareholder asked personal questions or it was within his rights to pursue it?
- Was there one member (including Board Members, Proxy firms, Private Equity, Mutual Fund investors) who stood up and objected to Mr. Naik when marshals were instructed to evict a shareholder?
Questions by shareholder were
very much valid:
"The land belongs to the collector who has given the licence to
the company for manufacturing till 2019. How can you demolish it? We are not
fools. How can the structure be demolished before 2019 and build a hospital and
residential units? Let shareholders know,"
Second question was a very apt
one:
Another shareholder wondered why Naik, who retired last September
should continue to call the shots. "At 75, tell me Mr Naik, why can't you
sit at home and play with the kids."
Answer from Subramanyan SN (Chief
Executive Officer and Managing Director) was very weird:
"Naik has been with this company from nowhere to whatever he is
today. And I hope all of you benefited during his tenure including four bonus
issues and now a buyback and dividend. Now at 75, he has retired and is only a
non- executive chairman."
Managing Director has directly nullified
all the other employees’ contribution by making above statement. It seems the bonus
issues, buyback and dividend was paid from Mr Naik’s personal wealth.
Mr.Subramanyam has forgotten that Mr. Naik was well paid as an employee with
Larsen and Toubro. I think he should check how much bonus issues were given at
Wipro (11 bonus issues since 1981).
When Managing Director makes
above statement I think we all can believe who runs the board and the control
wielded by AM Naik at Larsen & Toubro.
Now why I think AM Naik is not
the role model:
- He said that besides his father, grandfather, Mr. Baker and Mr. Pherwani “He is a self made man”. I believe "Self Made" is to be described by others not by self.
- He stated “Zero time to my wife and no time to my children”. He regrets for not giving time to family. He worked for 18 hours a day.
- For the first 21 years of his career he had not taken any leave / weekly off.
Some quotes to remember (Good To Great
book):
“Bad decisions made with good intentions, are still bad decisions.”
“Consider the idea that charisma can be as much a liability as an
asset. Your strength of personality can sow the seeds of problems.”
“For no matter what we achieve, if we don’t spend the vast majority of
our time with people we love and respect, we cannot possibly have a great life.
But if we spend the vast majority of our time with people we love and respect –
people we really enjoy being on the bus with and who will never disappoint us –
then we will almost certainly have a great life, no matter where the bus goes.
The people we interviewed from the good-to-great companies clearly loved what
they did, largely because they loved who they did it with.”
“Leadership is not personality.”
“The good-to-great leaders never wanted to become larger-than-life
heroes. They never aspired to be put on a pedestal or become unreachable icons.
They were seemingly ordinary people quietly producing extraordinary results.”
References:
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