Mumbai, April 7: A.M. Naik has formally handed over the leadership baton at engineering conglomerate Larsen & Toubro (L&T) to his chosen successor S.N. Subrahmanyan.

Subrahmanyan, deputy managing director and president, will take over as chief executive officer and managing director from July.

Naik, who will retire as the executive chairman on September 30, will take on the role of non-executive chairman from October 1 for three years. He has been at the helm of L&T for almost 18 years and has been with the company for more than 50 years.

In September 2015, Subrahmanyan was made deputy managing director and president of L&T. Prior to that, he was senior executive vice-president (construction and infrastructure) and a member of the L&T board.

In 2016, Naik told shareholders at the company's annual general meeting that Subrahmanyan would succeed him. That announcement was formally sealed today with the board appointing Subrahmanyan as CEO and managing director with effect from July 1.

"It is an onerous responsibility of managing a complex and diversified and very uniquely positioned organisation. And stepping into the shoes of a legend like Naik is definitely not easy and is not something which one would look forward to in a business-as-usual manner," Subrahmanyan told PTI.

On Subrahmanyan's elevation, Naik today said: "Over the last 10 years, and especially after he was identified as the likely successor three years ago, I have been personally mentoring Subrahmanyan and grooming him for the enlarged responsibilities of the CEO."

Naik's new role

The board has also appointed Naik as non-executive chairman with effect from October 1 for three years.

A company statement said the board had requested Naik to provide advice, guidance and mentorship to the executive management in the capacity of non-executive chairman.

"Given Naik's understanding of the complexities of high-tech businesses and his rich experience in the field, the board felt his role as an adviser to the next generation of leadership would be essential for sustained growth and profitability. Naik has acceded to the board's request,'' it said.

Naik's current term as group executive chairman ends on September 30. He was appointed CEO of L&T in 1999 and chairman in 2003. His leadership has seen market capitalisation of L&T rising from Rs 4,400 crore in 1999 to Rs 1,58,000 crore in 2017.

He has been responsible for L&T's foray into international business. Global operations now account for around 30-35 per cent of the company's total turnover.

Subrahmanyan's job

Subrahmanyan said L&T's businesses have stability and growth, and "we just have to see how to take it forward".

"We have our five years strategy plan in place... We have identified the businesses that we need to exit as well as those which are potential growth drivers," he said.

Subrahmanyan, who joined L&T in 1984, has a degree in civil engineering and a post-graduate in business management. He leads L&T's largest infrastructure projects, including airports in major cities, metro and freight corridor projects across India and West Asia.

However, Subrahmanyan will have his job cut out as the business environment continues to remain patchy. During the third quarter ended December 31, 2016, L&T saw order inflow declining to Rs 34,900 crore.