When the mindset of people at the helm fails to keep pace with a firm's growth, ugly boardroom dramas like the one playing out in Mindtree's boardroom unfolds. The founders of the Bengaluru-based mid-size information technology services firm are locked in an emotional battle against the takeover bid by construction and technology giant Larsen & Toubro (L&T), which has deployed a massive Rs 10,733-crore war chest for storming the boardroom of the 20-year-old public-listed company.
Mindtree founders Krishnakumar Natarajan, Subroto Bagchi, and Parthasarathy NS, and chief executive officer Rostow Ravanan have taken the battle to the public with a joint press conference and emotional posts on the social media. But L&T remains undeterred and managing director and chief executive officer SN Subrahmanyan has offered to allow Mindtree to keep its separate identity for "some time to come".
Even as L&T is expected to come out with a detailed public statement (DPS) on its takeover bid, Mindtree chairman Krishnakumar has demanded that the company founders would like to know the "contours of independence" that L&T would offer Mindtree. The Mumbai-based conglomerate has already made clear its decision to retain Mindtree as an independent listed entity. "I don't know what the contours of the independence are. It is difficult to make a (judgement) based on a press statement," Economic Times quoted Krishnakumar as saying. He claimed that the board of the 20-year-old company is "aligned to the logic" of the promoter group.
The promoters jointly hold 13.32 per cent stake in the company, while L&T has already bagged 20.32 per cent stake form Café Coffee Day (CCD) founder VG Siddhartha. L&T, which already has its subsidiary L&T Infotech operating in the same market space as Mindtree, has made two open offers for accumulating 66.41 per cent stake in the company.
Management experts, however, consider the emotional reaction of the Mindtree founders uncalled for, according to a report on Quartz website. "Part of managing a business as large as this is agility in dealmaking... the management have shown poorer acumen than one expects from professionals of their calibre," Vivek Durai, founder of business intelligence platform Paper.VC told the website in an email. "They have also shown an amazing lack of ownership and foresight repeating exactly the same mistake as (Infosys founder) NR Narayana Murthy by passing the baton forward from one founder to another. A silly tradition that should never have started in a company that promotes meritocracy."
On March 19, Bagchi quit as head of Odisha Skill Development Authority (OSDA) and returned to Mindtree to lead the fight against the takeover bid. He tweeted, "Mindtree has not been designed as an 'asset' to be bought & sold. It is a national resource. It has a unique culture that humanizes the idea of business. It sets the standards of corporate governance. I need to be there in its time of difficulty. Hence the hard decision to return."
Quartz writes Bagchi's interference is reminiscent of Murthy's April 2017 outcry over the salary of then-Infosys CEO Vishal Sikka and the hefty severance packages doled out to former CFO Rajiv Bansal and former chief compliance officer David Kennedy. By August, Sikka had quit and co-founder Nandan Nilekani returned after a gap of eight years as non-executive chairman to stabilise the leadership churn.