Within 48 hours of L&T gaining control of Mindtree, the IT firm’s founders Krishnakumar Natarajan, Parthasarathy NS and Rostow Ravanan have resigned from the board and executive roles, paving the way for the new promoter to make appointments.
Chairman Natarajan, vice chairman Parthasarathy NS and chief executive Ravanan have quit the company, the firm said in a regulatory filing Friday.
The company said it will announce a new leadership team in due course.
Over the past few weeks, there have been speculations about Ravanan quitting the company. Reports had suggested that the construction major wanted Ravanan to step down as new owners were preparing the grounds for a top management overhaul at the Bengaluru-based company.
The founders had vehemently opposed the L&T bid, terming it “hostile” and as a grave threat and value destructive to shareholders. Interestingly, there were speculations that they too may sellout their holding in the open offer launched by the construction major but they continue to stay invested although they will no longer hold any board position.
“At the board meeting held on July 5, 2019, Krishnakumar Natarajan (Executive Chairman), Parthasarathy NS (Executive Vice Chairman and Chief Operating Officer) and Rostow Ravanan (CEO and Managing Director) have submitted their resignations as members of the board of directors of Mindtree and as employees of the company,” Mindtree said in a regulatory filing.
It added that these officials will stay as board members till July 17, 2019 and as employees in line with their employment contracts to ensure smooth transition. Along with the other founders of the company, they have asked the company to de-classify them as promoters under applicable laws.
“Mindtree has delivered exceptional performance for all our stakeholders over the last 2 decades through our differentiated strategy and unique culture. We are grateful to all our customers, Mindtree Minds and external stakeholders for their steadfast support throughout our journey. We wish the new leadership team at Mindtree the very best,” Natarajan said.
There is a market buzz that former Birlasoft CEO Anjan Lahiri (also one of the Mindtree founders) could make a comeback at Mindtree.
Earlier this week, Mindtree had announced that L&T had acquired control of the company and had been categorised as a promoter with 60.06 percent stake in the company. L&T held 9.87 crore equity shares in Mindtree as on July 2 following its recently-concluded open offer.
The development brought the curtains down on months of hostile takeover drama at Mindtree which was established in 1999 by 10 IT professionals. Since then, the company has grown to have well over 20,000 employees with annual revenue of USD 1 billion.
L&T’s takeover bid had been strongly resisted by Mindtree founders, who had also tried to rally support from large investors like Nalanda. Nalanda, incidentally, also sold majority of its holding in Mindtree during L&T’s open offer.
L&T’s takeover of Mindtree marked India’s first-ever hostile takeover in the IT space. The infrastructure giant had bought 20.32 per cent shares in Mindtree from V G Siddhartha and his coffee enterprise for over Rs 3,000 crore in March. Later, it shored up its holding with more share purchases from the open market before making an open offer for an additional 31 per cent stake.
Last month, L&T secured three board positions at Mindtree bringing in S N Subrahmanyan (L&T CEO and MD), Jayant Damodar Patil and Ramamurthi Shankar Raman. Their appointments are effective July 16 when Mindtree is scheduled to hold its annual general meeting (AGM).
Mindtree co-founder Subroto Bagchi, who is set to retire this month, had not offered himself for re-appointment to the board.
At the end of March 2019, Mindtree had eight members on its board, including Ravanan, Natarajan and Parthasarathy. It had four independent directors on its board – Apurva Purohit, Milind Sawarte, Akshaya Bhargava and Bijou Kurien.
Shares of Mindtree closed at Rs 888.05 on the BSE on Friday, 1.17 percent lower than the previous close.