After nine long years, the top job may be split into two: that of chairman and CEO.
Sources familiar with the developments say on turning 70 this year, Naik is likely to become either the non-executive chairman or even chairman Emeritus.
"Naik himself wanted to retire but the board has requested him to stay on. He brings tremendous value to the organisation, which in itself is very complex and difficult to manage," says a person privy to these discussions.
However, he says it's still early days and the names and the final board structure will evolve over the next two-three months.
The jury is still out on who will then succeed Naik as the MD & CEO.
Sources say three internal candidates have been shortlisted, all of whom are currently on the company board as whole-time directors.
They are Krishnamurthi Venkataramanan, President of Hydrocarbon; Madhukar Vinayak Kotwal, President, Heavy engineering; and Ravi Uppal, President, Power.
But, the nomination committee will shortlist external candidates as well.
The aforementioned source says an outsider is also being considered and the final interviews will begin shortly.
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"It will be incorrect to say who is leading the race as it will be too premature right now," he says.
When contacted, an L&T spokesperson told Business Standard: "All this is speculation and as company policy, we will not comment on rumours.
"There will be no announcements made by the company before April this year as has been stated in the past."
All the three potential MD candidates are in their 60s, with Ravi Uppal being the youngest. Directors on the board of L&T retire when they turn 67, while for the chairman and managing director the age is 70.
Many L&T watchers believe Uppal is the firm favourite, having worked with multinationals like ABB, where he headed global markets for the Swiss-Swedish power and automation major.
He was also with BHEL for a long time and currently heads the strategic power equipment business, which has a sizeable order book of over Rs 19,000 crore (Rs 190 billion).
Such a huge experience in India and abroad in the capital goods space is believed to be extremely valuable for the top job at L&T. But, there are still some who insist it's not a done deal and there could be some surprises in store.
Both Kotwal (63) and Uppal (60) have the advantage of a longer possible stint, being younger to Venkataramanan.
From a business perspective, as of November 2011, out of L&T's total combined order book of Rs 1.42 lakh crore, hydrocarbon accounted for 13 per cent, power a big chunk at 31 per cent and heavy engineering 19 per cent.
But, when it comes to the turnover, all three along with S N Subrahmanyan, whole-time director and & Senior EVP Construction, are part of the bigger engineering and construction group, which contributes 85 per cent of the total group revenue of $11.7 billion and 80 per cent of the Ebitda.
The remaining product verticals like electrical and electronics or infotech are much smaller in operations and revenues, leading many to assume that Naik's successor if chosen internally -- will be from the bigger business groups.
S N Subrahmanyan and R Shankar Raman, the company's CFO, are new young leaders to have come up internally in a company that has for long been criticized for not nurturing its young blood.