L&T is supportive of the Rs 27 dividend announced by Mindtree for FY19, said SN Subrahmanyan, CEO and MD, L&T.
"We have always been fully supportive of the dividend," he told shareholders at the 20th annual general meeting in Bengaluru on July 16 amid concerns from investors.
Given that Subrahmanyan's position in the board as non-executive member is subject to shareholders approval, he said he took permission from the outgoing Chairman Krishnakumar Natarajan to speak.
At the AGM, investors raised concerns about whether L&T would agree to the dividend of Rs 27 Mindtree had announced to mark its 20th anniversary and also touching the $1 billion revenue mark.
Analysts had pointed out that it would deplete Mindtree's cash reserves by half. Mindtree's cash reserves account for about Rs 1,000 crore and the dividend payout accounts for about Rs 530 crore.
This AGM was quite significant for the company. It is the first after takeover by L&T and the last for the co-founders Rostow Ravanan, Krishnakumar Natarajan and NS Parthasarathy, who have resigned as key management personnel CEO, Chairman and COO respectively and also as board members in the company effective July 17.
All of them were present at the AGM.
The co-founders resigned soon after L&T become the official promoter of the company with 60.6 percent stake. In addition three new board members from L&T were appointed in the board as non-executive directors.
Subrahmanyan is appointed as the non-executive director. The other new board members include Jayant Damodar Patil, who is appointed non-executive director. Patil is the whole time director in L&T and Senior Executive Vice President for L&T's Defence Business. Ramamurthi Shankar Raman, who has been appointed non-executive director, is the whole time director and chief financial officer in L&T.
The appointment of the shareholders are subjected to shareholder approval, the voting for which happened today.
However apart from worries over special dividend and share bonuses, investors largely were happy with the takeover. An investor said that given that L&T is a large company, they are confident that Mindtree will grow under the new leadership.
Few did raise concerns about how the new management will continue operations in Mindtree. Will it be de-listed or the headquarters would move to Mumbai?
Allaying the concerns, Subrahmanyan said that there are no plans to de-list Mindtree now and its registered office will continue to Bengaluru rather than Mumbai.
"L&T will focus on "continuity" as a key theme in the management transition and continue to run the business of Mindtree independently and grow it further," he added.
"We believe L&T with its experience and track record of managing two very successful IT businesses can add value to Mindtree and its stake holders," said Subrahmanyan.
Mindtree will be kept distinct from L&T Infotech (LTI), L&T Technology Services (LTTS) and the recently formed business division L&T-Nxt.
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