Larsen & Toubro completed the merger of its IT services subsidiaries – Larsen & Toubro Infotech (LTI) and Mindtree – forming a new company that would be the country’s fifth-largest in market capitalisation. The new entity – LTIMindtree – with revenue of $5.25 billion this year would also be country’s sixth largest software firm in revenue terms.

Both the companies have started functioning as a single entity from Monday. Mindtree has been delisted, while LTI will be renamed LTI-Mindtree. The merger was closed after it got shareholders and regulatory approvals, including that of the National Company Law Tribunal’s (NCLT) Mumbai and Bengaluru benches.

The parent company, L&T, will hold a 68.73% stake in the merged entity. As part of the merger, Mindtree shareholders will get 73 shares of LTI for every 100 shares of Mindtree, with November 24 as the record date.

“LTI-Mindtree will be the fifth-largest software company by market cap, will have 90,000 employees on rolls, taking the overall headcount of the group’s software businesses to 120,000 (including that of another group company L&T Technology Services), spread across 30 countries and five continents. This year, the combined entity is likely to close with revenues of $5.25 billion, including that of the engineering services under LTTS,” A M Naik, group chairman of L&T and chairman of LTIMindtree, said.

“We expect the revenue to rise to $6.2-6.3 billion next fiscal. LTIMindtree alone will have a topline of $5 billion. The internal target is to get at least 26% of the group’s revenue from software verticals by FY26,” Naik said, adding LTTS revenue is more than $1.5 billion now.

“Both the companies had been posting 14.5-15% in net margin and following the merger, this is slated to further improve,” he added.

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LTI has over 400 clients now and that of Mindtree is at 300.

“This integration is much more than just the coming together of two-highly successful companies. It is about turning the collective wisdom of the two companies into a much larger force for creating long-term value for all our stakeholders,” SN Subrahmanyan, CEO and MD of L&T, and chairman of LTIMindtree, said.

Earlier in May, L&T had announced plans to merge LTI and Mindtree – to form a new entity with a combined net sales of `26,194 crore. The move came three years after L&T acquired Mindtree, what was then perceived as a hostile takeover. The combined entity will be led by Mindtree CEO Debashis Chatterjee, while L&T Infotech CEO and MD Sanjay Jalona has resigned.

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LTI’s strengths were in enterprise resource planning, SAP, automation and banking, financial services and insurance, while that of Mindtree includes retail, CPG and media and technology. The integration would help the entity win bigger bids, the companies had said during the time of the merger.

Talking about the attrition in the IT sector, which is hovering at about 23-24%, Naik said it is expected to fall to by 4-5%. He, however, did not provide a timeframe.