MINDTREE – L&T ACQUISITION INTERIM REPORT

INTRODUCTION

L&T acquired a controlling interest in Mindtree Ltd., in what is termed as a hostile takeover. Hostile
because Mindtree Ltd. fought tooth and nail to prevent this acquisition but to no avail as L&T bought
the shares from general public at a tender rate of Rs 980/share. However, L&T doesn’t term this as
hostile takeover as they believe that investors of Mindtree Ltd., approached L&T for putting up their
shares and not vice-versa. So, we will be covering this acquisition under below heads for a better
understanding in our final report.

CONCEPTS APPLIED:

1. Cultural Diversity

We will be dwelling upon the cultural diversity of the two organizations. Mindtree follows an
informal work culture wherein employees call members of the founding team by their first
names. In contrast, Larsen and Toubro's (L&T) work culture is based on command-and-control
and top-down management. How this cultural work ethic has changed, if at all, since the
merger would be our area of focus in our report. Mindtree has its informal, employee focused
work culture, which gives utmost priority to the welfare of its workforce. In absolute contrast,
L&T follows a rigid management with less decentralization and more focus on process rather
than welfare of employees. Hence, we would be seeing whether there have been any steps
from the end of L&T to accommodate the Mindtree’s cultural aspects.

Ref:https://www.livemint.com/companies/news/a-culture-shock-awaits-mindtree-
employees-under-l-t-1553154939141.html

2. Impression Management

Employee reviews on websites such as Glassdoor shows that Mindtree employees would think
highly of their company, their CEO, culture and values, versus employees at L&T. Thus, over
the course of our project, we would like to assess how L&T may have attempted at addressing
the concerns Mindtree employees have about their company and managed their first
impression on the newly arrived employees from Mindtree.

Ref:https://www.fortuneindia.com/opinion/mindtree-stands-taller-than-lt-in-employees-
estimation/103170

3. Gaining Role Clarity

Interviews (done by media houses) with L&T officials suggest that Mindtree employees will
continue to function as a separate independent entity with respect to other L&T employees,
given that their field of work is also somewhat distinct. At Mindtree, the culture was largely
mission driven. We would like to explore however, whether former Mindtree employees
perceive their mission/role to be any different since the takeover.

Ref:https://www.livemint.com/companies/people/mindtree-will-continue-to-operate-as-
separate-entity-hardly-any-conflict-with-lti-l-t-ceo-1562588510341.html

4. Power & Politics

Within days of the hostile takeover, Mindtree’s top bosses – CEO Rostow Ravanan, Chairman
Krishnakumar Natarajan and Vice Chairman Parthasarathy left the company. With shifting

Page 1 of 3
 power dynamics, we aim to understand the authority transition and how L&T exercised
legitimate power to align Mindtree to their interests. We would also like to explore the effect
this had on the employees at Mindtree.

Ref:https://www.livemint.com/companies/news/mindtree-chairman-vice-chairman-ceo-
exit-days-after-l-t-takes-control-1562328858993.html

5. Stress Management (Time, Work-Life Balance and Emotions)

Emotions were running high when the news of the takeover reached the employees of
Mindtree, due to uncertainty about their roles and the fear of being replaced. For those who
survived the shift, more changes awaited them. Mindtree had an informal working culture
and less working hours. However, at L&T, the organisation was very much formal and involved
longer working hours. We would like to understand how the shift affected the employees and
how they attempted to manage their stress.

Ref:https://www.thehindubusinessline.com/info-tech/how-mindtree-employees-tackle-the-
challenge/article26582424.ece

6. Conflict Management

There is no direct conflict between Mindtree and L&T Infotech (LTI) as "they operate in vastly
different areas with a minimum client overlap". - L&T CEO and Managing Director SN
Subrahmanyan.

We aim to understand how these decisions will affect the conflict that have arisen by the
hostile takeover of Mindtree.

Ref:https://www.livemint.com/companies/people/mindtree-will-continue-to-operate-as-
separate-entity-hardly-any-conflict-with-lti-l-t-ceo-1562588510341.html

7. Collaboration efforts at individual and team levels

Mindtree will be run as a separate entity, distinct from L&T Infotech (LTI) and L&T Technology
Services (LTTS). The entities would run at an arm's length. - L&T CEO and Managing Director
SN Subrahmanyan.

We would like to understand how L&T aims to leverage its ownership in Mindtree to result in
a more synergistic output, given their claims at keeping the companies separate to minimize
conflicts. This is keeping in consideration that the logic behind acquiring Mindtree is to expand
L&T’s services business.

Ref:https://www.livemint.com/companies/people/mindtree-will-continue-to-operate-as-
separate-entity-hardly-any-conflict-with-lti-l-t-ceo-1562588510341.html

8. Employee response to innovation:

Generally, there is always a tendency to resist changes. Employees of Mindtree Ltd. are
working in an organic culture where innovations are incentivized whereas L&T being a
hierarchical organisation has entirely different view to look at innovations. We are studying
some recent innovations done at both the organisations and trying to assess the contribution
of employee motivation and organisational culture into it.

Ref:https://www.odwebp.svc.ms/share?smkt=en-US&share_mode=1

Page 2 of 3
9. Professional Identity

Acquisition of Mindtree by L&T was a hostile takeover. In June 2019, L&T is categorized as
promoter of Mindtree. As the business of two entities is completely different with minimum
overlapping of clients, currently it is decided to run both organisations separately ( Atleast for
next 2 years).

We are in talks with some employees of L&T to assess the possibility of a complete Merger in
near future. This will be based on primary research.

10. Interviews:

Planned for interviews with employees of L&T and Mindtree. Focus area would be the cultural
aspect as well as the role clarity that we have discussed above. Also, we would be taking the
general view of the employees as to what they feel will be the way forward for this acquisition.

Page 3 of 3