Ranbaxy chief's exit puts focus on family-run firms

Wednesday, 24 December 2003, 08:00 Hrs
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NEW DELHI: Is D.S. Brar's surprising announcement of relinquishing charge at India's top drug maker by sales is just a personal career move or an indication of growing fissures between promoters and professional management?

After Brar, chief executive of Ranbaxy, made it clear that he would quit next year, analysts are weighing where the blame should fall for the sudden exit of the man who oversaw the emergence of the firm as India's first multinational that has drawn international attention with its cheap AIDS drugs.

Brar, who took over the reins of Ranbaxy Laboratories from promoter Parvinder Singh in 1999, said Monday he would not renew his contract as chief executive officer and managing director after it expires on July 4, 2004.

The move is being seen as paving the way for Malvinder Singh, elder son of the late Parvinder Singh, to take charge of the pharmaceutical firm. Malvinder is going to step in as president (pharmaceutical) and take Brar's position on the company board.

"Brar was clearly the captain of the ship when must of the new things happened and made Ranbaxy a global brand name in a short span of time," said a New Delhi-based independent management consultant.

"The decision of Brar to quit at a time when the company is growing from strength to strength raises lot of questions about the equation between professionals and promoters," the consultant, who didn't want to be named, told IANS.

"It is not uncommon in the corporate history that promoters of a company take control of a business if they realise that the professional management at the top level is not delivering the goods.

"But this doesn't seem to be the case at Ranbaxy. No one had expected Brar to leave the company so soon. His tenure was stunningly successful and he was respected by the industry as well as consumers."

Brar, who had joined New Delhi-based Ranbaxy in 1977, took charge from an ailing Parvinder in 1999. The two sons of the promoter - Malvinder and Shivinder - were in their 20s at that time.

Brar was instrumental in developing the pharmaceutical exports business of Ranbaxy in early 1980, which later became synonymous with major growth and expansion of company's portfolio.

In early 1990s, he led the company's expansion into overseas markets creating joint ventures, affiliates and subsidiaries in major countries like China, Russia, Britain, South Africa and US.

Industry watchers say Brar's strategy for Ranbaxy's growth was to profit from the low cost of his skilled workforce in India and build on the company's expertise in making generics for Indian consumers.

The company makes a wide range of drugs including antibiotics and cardiac drugs. It is a major producer of generics, with exports accounting for a major portion of its revenues.

Ranbaxy Laboratories has also managed to carve out a niche for itself in the global pharmaceutical market by producing AIDS drugs that are among the cheapest in the world.

Ranbaxy and three other Indian drug makers, Cipla, Matrix Laboratories and Hetero Drugs, and a South African company, Aspen Pharmacare Holdings, recently agreed with the William Jefferson Clinton Foundation to provide AIDS drugs to four African and nine Caribbean countries at sharply lower price.

"There's no doubt that his pragmatic management practices had won him the position as CEO and made him excel in a highly competitive environment," said Arun Goyal of Academy of Business Studies.

"I am really not sure whether the promoter's family would continue to maintain the same growth level of Ranbaxy in the years ahead. It is for the market to decided the future of the company," he added.

Despite the rapid changes in Indian corporate world in recent years, most of the country's biggest businesses such as Reliance Industries and the diversified Tata group continue to be family-run affairs.

Analysts say despite significant changes in professional management practices in India as a result of the liberalisation of economy and entry of a slew of multinationals, family remains a strong influence on businesses in the country.

Source: IANS
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