IT WAS THE 2013 IPL match between Royal Challengers Bangalore (RCB) and Pune Warriors Indians. Unbeaten at 175 with 13 fours and 17 sixes, Chris Gayle’s assault against Pune Warriors remains the single-most feat of power-hitting ever seen in the history of T20 cricket.
Having witnessed Gayle’s innings at the Chinnaswamy stadium in Bengaluru, Debashis Chatterjee recalls it as one of the most memorable sporting moments till date. “I realised later that probably that kind of a match will never happen easily again,” he says. An ardent cricket fan and having played the sport in his younger days, watching the game takes precedence for Chatterjee over every other thing during his free time. But past four years have hardly offered him a breather, especially since he was busy proving his mettle as the head of one of India’s top IT services companies.
In May 2022, India’s infrastructure behemoth L&T group announced the merger of L&T Infotech and Mindtree, two companies delivering IT-related services. Though the merger was anticipated by the Street right after the group acquired Mindtree in 2019, “If the pandemic had not happened, it would have happened earlier,” says Chatterjee, MD & CEO, LTIMindtree.
Merging two listed entities, headquartered in two different cities, (Mindtree in Bengaluru and L&T Infotech in Mumbai) posed its own set of challenges for the senior management. Chatterjee, or DC as he is referred to, says the real integration, technicalities and business alignment started in November 2022, once the required statutory approvals were in place, with a six-month internal window to wrap up the process. Once legal approvals were in, “the priority as a leader was to ensure that we can get the leadership, systems and processes in place in a fairly short time. Our target was April this year and we met the target,” says Chatterjee.
With A.M. Naik and S.N. Subrahmanyan guiding the process, a steering committee was formed with a select group of leaders. The aim was to bring together two firms without much disruption and identify the right leaders to lead the merged entity. “Leaders were assigned multiple tracks. One of the tracks I personally looked into was the culture track,” says Chatterjee.
As management consultant Peter Drucker famously said, “Culture eats strategy for breakfast”. The sign of a well-drawn out merger is to be able to retain the best of both worlds. While in this case, integration had its own challenges, Chatterjee says when the process began, he realised the two firms were quite similar in their culture.
As part of the new leadership post transition, Vinit Teradesai, formerly CFO at Mindtree, was made the CFO of the combined entity. The sales leadership split between Sudhir Chaturvedi (formerly president, sales, L&T Infotech) and Venugopal Lambu (formerly president, global markets, Mindtree). Nachiket Deshpande, COO at L&T Infotech, was made the COO at LTIMindtree. While Chatterjee spearheaded culture, manpower and management integration, Deshpande oversaw the delivery structure, internal systems and talent supply, while Teradesai handled finance, risk management, regulatory and compliance.
As a combined entity, LTIMindtree currently has over $4 billion in annual revenues. “All the way from Naik to SNS, we wanted to become a large IT services firm. The aspiration is that 0 to $4 billion is not enough! How can we become a $10-billion enterprise?” says Chatterjee.
On the business side, the ‘LTIMOne’ framework is aimed at a go-to-market strategy and simplified structure leveraging individual strengths of both companies. While L&T Infotech had its strength in the BFSI sector and Mindtree’s was in the technology, communication and media, there was minimal overlap of clients. The combined revenue size also brought with it the benefits of scale, especially large deals. Also, looking at the value TCS brings to the Tata Group, for L&T as a group, the ambition seems somewhat reminiscent of a similar playbook. In his annual letter to shareholders, Naik had said, “By leveraging cross-industry expertise, we will deliver greater value to all stakeholders. This organisation is integral to the technology led strategic vision of the parent group, and will play a crucial role in the expansion and diversification of its services portfolio”.
The ‘LTIMOne’ strategy aims at a future-ready entity. Currently, LTIMindtree is the sixth largest by revenue in the IT space (as on March 2023). With a single go-to-market strategy, the company is looking to bring in synergies and diversify its revenue portfolio.
If one looks at the pre-merger metrics, in FY22, Mindtree’s revenues stood at $1.4 billion, with over 35,000-plus employees, and Communications, Media & Technology (CMT) bringing in 43% of the overall revenues. While Retail, CPG & Manufacturing (RCM) vertical contributed 24%, the BFSI segment accounted for just 18%. Geographically, North America brought in 74% of revenues. In comparison, L&T Infotech clocked $2.1 billion in revenues in FY22, and employed over 46,000. Banking and financial services made up for 32.5% of the revenue bucket, while insurance contributed 13.8%.
However, post merger, the diversification and revenue stream looks different. In FY23, LTIMindtree’s revenues stood at $4.1 billion, up 19.9% in constant currency terms, with the number of active customers at 728, against 673 a year ago. While large ($50 million-plus) clients increased to 13 from 10, North America remained the biggest contributor to revenue (over 72%). The BFSI vertical now accounts for 37% of overall revenues, followed by Hi-Tech, Media and Entertainment (24.3%) and Retail, CPG, Travel, Transportation & Hospitality (15.4%).
With the dust of the integration settling down, LTIMindtree registered $1,059 million in revenues in Q1 FY24. According to Nomura analysts, a double-digit growth in FY24 is unlikely, given the sluggishness in execution, and the management indicating pausing discretionary projects in many cases.
That remains the next big challenge for Chatterjee in the days to come.