Larsen and Toubro Ltd (L&T) on Friday announced the appointment of current deputy managing director and president S.N. Subrahmanyan to the helm of the company, as its new managing director and CEO. This appointment replaces A M Naik, who headed L&T for 18 years and who now takes on the role of non-executive Chairman.
Subrahmanyan, called SNS by his colleagues, is fifty-five years old, a civil engineer who during his tenure at L&T headed many of the firm's projects, including the construction of major Indian airports, and metro systems in the Middle East. SNS takes over from a leader who by all accounts has been a popular CEO within the company. Naik was widely considered as the architect of the company's global expansion, and its diversification into hard to break through sectors such as defence.
L&T has appointed a new CEO just as the company is by its own account, experiencing a more protectionist global market, with countries favoring local over international firms. While the domestic market may remain strong with moves by the government to speed up project clearances and improve order flow, the company faces challenges in margin improvement, and monetizing its assets.
The key metrics for Larsen & Toubro are healthy: Stable revenue (+3.54% YoY in Q3), Improving operating margin (9.6% in Q3) but weaker net profit growth (-6.02% YoY in Q3). The company's share price has been trending up on strong orders in the fourth quarter of FY17. SNS's predecessor has set ambitious targets for him to meet - an annual revenue growth of 15%. This is a target the company last crossed in March 2013.