The completion of the merger between Larsen & Toubro Infotech (LTI) and Mindtree has resulted in the formation of India’s sixth-largest software firm, with expected revenues of $5.25 billion this year. LTIMindtree CEO and MD Debashis Chatterjee in an interview to FE’s Rajesh Kurup says the merger has resulted in a “perfect synergy” of the capabilities of two companies’. Excerpts:
Now with the formal integration completed much ahead of time, when will the operational part of the merger be closed?
We had announced the integration in May and there is always a process of getting all regulatory approvals, which generally takes some time to close. We thought it would take 6-7 months, and that’s when we said that our aspiration was to get it done by the end of this year.
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We got tremendous support from everybody, including the authorities, helping us to close it earlier. Monday was the first day of the merged entity. Now there is an operational part of integration, which would be done by end of this fiscal. The entity will start trading as a single company from November 24.
Following the integration, which would be the main sectors contributing to the revenues of the merged firm?
We have a good base across multiple industry verticals. But to specifically call out, we have strong banking and financial services and insurance (BFSI), media and technology and manufacturing practices, and some of these industries will be easily more than half-a-billion dollar and in some cases billion-dollar industries. More important is that we get a good scale across all the industries and we have the ability to cross sell and upsell to every client.
Will the merger of two different companies with separate skill sets lead to overlapping of clients and services?
The strengths of the firms are across industries, service lines and geographies. On the industries front, except for BFSI, there is a bit of overlap in capabilities but not too many overlapping clients. Across other industries, the companies have their own strengths, like Mindtree has been present in travel and hospitality for a long time, while LTI doesn’t have much presence. It’s vice-versa in oil & gas.
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The industry overlaps are minimal and wherever they overlap, they are no client overlaps. On service lines, Mindtree is strong on certain fronts like digital transformation, whereas supply chain transformation is the core DNA of LTI. It is not to say that Mindtree or LTI did not have the other capabilities but now with merged entity, the capabilities have become much stronger as a combined entity. On the geography front, there is a proper alignment in terms of the markets, delivery and nearshore centres we support. So, from all the aspects, there is a perfect synergy.
What’s the overall aspiration to create a larger entity?
How to become a $10-billion enterprise is our aspiration. Now, whether it happens in three years or five years, we don’t know that yet. It’s difficult to call out a timeframe right now. We need to put a strategy behind it. Our goal is to continue on the journey of profitable growth, and as a part of this journey, we are open to organic and inorganic opportunities.
The merged entity will have about 90,000 employees on rolls. Would there be any job losses? We have been very vocal about the fact that we want to create more opportunities in the marketplace. So, there is no question of any job losses per se. This has been clearly communicated to the employees also. With our aspirations, there will be more headcount admission, but we have to wait and see how the clients’ budgets, pipelines and opportunities shape up.
