L&T is always looking for a good acquisition: Chairman A M Naik

India Inc veteran A M Naik is bullish on the IT services industry as he announced the merger of the group’s two listed entities in the sector – Mindtree and L&T Infotech. According to L&T Group's Chairman, the combined entity will help the group bag bigger deals and the share of IT services in the overall group will be around 40 per cent in the coming 2-3 years. 

Excerpts: 

On IT services’ share in L&T group 

The minimum will be 40 per cent from IT services and some of the IT-related other businesses like start-ups. The other 60 per cent will be from normal businesses over the next 2-3 years. 

On layoffs post the merger 

We are growing so fast and the manpower is in such short supply that even with the two companies combining, we can take 10-20 per cent more (people). That is the situation. If we want to service all the clients, we want considerably increased manpower. 

On further acquisitions 

If there is a good opportunity then we will always be looking for one 

On minority shareholders supporting the merger 

There is a process. Both boards have discussed and it is very transparent. I do not see any problem with any shareholder whether small or big finding themselves at any disadvantage. 

On potential of bagging bigger deals post the merger 

Our average deal size of $25 million. Given the overall size and recognition of L&T, once in a while we get enquiries for $50 million. In few cases, it went up to $200 million but now we want to make it a matter of normal happening. So, when the company is combined by the end of the year, it will be bigger for sure. And we expect we will be able to get $100 million deal. Whether we win or not is another matter. The size of the merged entity will qualify us to be really considered for $100 million+ deals. 

On attrition till the merger is completed 

The whole industry has huge attrition problem, bigger than ever before. Attrition in both the companies is similar with a difference of around 2-3 per cent. A powerful company will be emerging from this merger and we think that may be the attrition rate will come down with by a per cent or so. But it is unlikely to go up. 

On impact of Russia-Ukraine war 

For the IT industry, there is no impact at the moment. On the contrary, demand has gone up. There are 5-6 lakh software engineers in Ukraine. There are some customers who have called us and said that their work has stopped because of the war and will you be able to give us 1,000 people in one week. We ourselves are having a serious manpower issue so how do we capture the additional demand that has come up as a result of the war. So, it is not impacting us negatively. If we had the capacity and the manpower, it can affect positively.
 

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