[Throwback] This industrialist battled Ambani, Birla for L&T; never took a day off in his first 21 years at the company
Photo : BCCL
The story goes over three decades back to 1987 when Reliance Industries’ Dhirubhai Ambani had managed to wrest significant holding in Larsen & Toubro (L&T) and then launched a hostile takeover bid in 1989. This was after Dubai-based businessman Manu Chhabria bought a 1 per cent stake in the company in 1987.
Chhabria’s stake purchase worried the former chairman of L&T NM Desai, who got afraid of the former’s hostile takeover. He sought Ambani’s help who bought an 18.5 per cent stake for approx Rs 190 crore over the next 2 years. His sons Mukesh and Anil were given board seats in the company.
However, it turned out that Ambani was interested in the cash-rich L&T and took advantage of his position in the company. He took a grant of Rs 570 crores from the firm, asking it to buy shares in Reliance. But the tables turned when there was a government intervention in 1989, making sure the Ambanis were out of the company.
They were forced to resign from the board, which made the family passive investors in L&T for over a decade. Cut to 2001, Ambanis sold their entire stake in L&T to KM Birla, who was eyeing the cement division L&T had.
In November 2001, Naik, then CEO and Managing Director, who was in Chicago, got a call from Mohan Karnani, then president of L&T cement business saying ‘apna maalik badal gaya hai’ (our owner has changed) and that the Birlas had bought complete stake of Reliance Industries in L&T in an all-cash deal.
Amid the hostile takeover bid, L&T was in a desperate need of a strong leader and they found it in AM Naik, the CEO & MD of the company. He managed to save the company by asking its employees to become the owners. This is how L&T’s employee trust was formed.
Naik recalls L&T hostile takeover bid
In an event five years ago, Naik said that the conflict with the Birlas ended in a win-win situation for both companies. “Grasim became the largest producer of top-quality cement, and L&T emerged as one of the best engineering, manufacturing and projects company in this part of the world,” he had said.
Naik had joined L&T as a junior engineer in the mid- 1960s and went on to become its Chairman.
He recalled that he received Anil Ambani’s call after the stake sale to Birla who said to him that ‘Anilbhai (Naik) you never wanted us. So we are going. We have sold the entire shareholding of Reliance in L&T to Kumar Mangalam Birla’.
Naik recalled that he got another call, this time from Birla, who said “you didn’t come to us Naikji. So we have come to you.” “In the end we kept L&T independent. We ringfenced it from future takeover attempts by setting up the L&T employees welfare foundation that eventually bought Birlas stake. And the Birlas got our demerged cement business that added to their cement production capacity,” Naik remembered.
‘No days off in 21 years’
“For 53 years I’ve worked for 15 to 16 hours a day, sometimes even on Sundays and holidays,” he said.