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ShareIt was alright when the Indian economy was closed and there weren't enough jobs for everyone. But today, there are no nurses in hospitals, or no proper hospitality staff in hotels.
We may have to put 15-20% activities in the Gulf and Malaysia. But we do not want to fritter away our energy by fighting German construction companies in Germany.
Why Gulf?
My people have to become smart. That's where they face the whole world. So when MNCs come and attack me in this country, my boys at least have a better benchmark, understanding and a better quality feeling. Therefore we can remain up-to-date to defend our turf.
In manufacturing, I have no geographical restriction. If it is made in India, I can export anywhere in the world. I am also not counting my IT business which is now exporting Rs 1,500 crore. It is one among ten companies. So when I grumble about the outsourcing industry sucking away India's talent it is because I want the powers-that-be to realise that outsourcing beyond a point is not in our interest. My complaint is that these companies sign up civil engineers, mechanical engineers, electrical engineers.
Why can they pay better salaries? Because L&T works at 7-8% PAT, they work at 26% PAT. I cannot overcharge the nation. They charge it because of the cost advantage gives them enough leverage and gives their employees double and they still end up making 26% PAT. I doubt if they will last for long.
Five years from now, China will emerge. As its manufacturing matures, China will use its non-engineering talent selectively, and use their 10,000 English teachers to create a rapid workforce to compete against us.
L&T also has some outfits in China?
I don't have IT-only four manufacturing plants. According to me, the Chinese are the most unreasonable competitors in the world. Everyone knows that China's currency is 35% undervalued. And we are champions of free economy. So we allow our rupee to float so the rupee has appreciated and tens and thousands of people are out of jobs. Small people are crying.
L&T's five units are put up for sale because of the appreciating rupee and Chinese
competition. Now, if China believes in competition and if they float their currency I am very confident that I can fight back. The moment their currency hava is over, there would be any number of people who'll say India is a far better destination.
They want to come here rather than China. Or, at least, have one leg here and one leg there. But India cannot fight Chinese competition. Who has created this? Our own government!
L&T is doing well in spite of these troubles?
The Securities and Exchange Board of India chairman says if you pinch L&T's Naik, you'll find an L&T overcoat. Kumar Mangalam Birla took me to his grandfather B K Birlaji and introduced me by saying: 'I've never seen a man who's so committed and loyal to his company." In my career of 40 years I've received many offers, but I always tell them that this life is reserved for L&T, may be if I am reborn and return as a human being, I could consider then.
So what are the challenges?
Talent is the only one for now. And China. The government said you should put one more boiler and turbine plant. The supercritical Mitsubishi boiler plant is the world's number one. On the other hand (Naik whistles) 4,000 mw is imported. So before I am born, I am being killed. This is our nation.
The least that the politicians can do is stop cutting ribbons in the outsourcing industry. There are more than 75,000 engineers working on design in India for foreign companies. They are the brains, and there are 150,000 other engineers working in the IT industry who are non-computer science engineers. Then the Bangalore Club complains that infrastructure there is cracking. Arrey tumko kisne bola tha 100,000 engineers leke aao Bangalore mein. Secondly, who asked you to recruit civil engineers? There are no civil engineers available to build infrastructure!
You also have an IT subsidiary...
Because, in 1999, when I took over we lost 8,500 engineers to the IT industry. And by the time I was thinking whether to enter IT or not I lost another 800. So I decided to defend L&T-so that when my other engineers want to join other IT industries, they can seek a transfer as long as they work in core L&T for three years.
Will you make L&T a holding company?
Right now we are deeply involved in creating verticals or virtual companies. We have formed a separate board for that. Currently there are six divisional boards eventually there will be 12 vertical boards.
Will they be filled up by young people in L&T?
Well young people do not exist in L&T, because they left when L&T became a seniority driven company. Not any more. So I am putting so much effort now that isme kaun hain star usko phataphat upar lao. Agle teen saal mein they have to become the backbone of L&T.
We've just launched the programme. Our internal processes training and development, encouragement and empowerment must be such that ordinary people can do extraordinary things.
So your succession planning has begun?
I want to call it steep deep diving into level four and five to see what's in store before we recruit laterally. Otherwise succession planning is an ongoing process. Now we want to be systematic--take inventory of future talent.
How are you protecting L&T as a possible takeover target?
The most important thing is the spirit of L&T. It will live on as long as the old generation is there. The new generation does not have the same sense of belonging. We have a programme. Employee to L&Tite. My strong message when I speak every week or ten days is on only two things. We build India - please align with us to build our powerful nation.
Secondly, your main job is to convert employees to L&Tites, so that the future of the company is secure. One is by consistent performance. Second is to resist any moves. As long as L&T continues to perform, the financial institutions' understanding is that they will back the management. We are still paying back the loans.
What about the Ultratech stake? (L&T still owns 11% of the Birla cement company)
I haven't decided yet. Because I am waiting for peak value.But yes it's on the cards.
