Parvinder Singh steps down as Ranbaxy MD

MOHALI, JUNE 8: Chairman and Managing Director of Ranbaxy Laboratories, Parvinder Singh has formally announced his decision to step down ...

MOHALI, JUNE 8: Chairman and Managing Director of Ranbaxy Laboratories, Parvinder Singh has formally announced his decision to step down as managing director and chief executive officer of the Rs 1,400-crore pharma major effective October 1 this year. Singh would, however, continue as the chairman.

Addressing company shareholders here today, Singh said the company8217;s president, D S Brar would take over as MD amp; CEO on October 1. On his stepping down as MD, Singh said 17 years as CEO of a company is a long tenure. 8220;A person tends to get stale. My health has also not been very good for quite some time. Let somebody else who is younger, whose thinking is different lead the company for the next 15-20 years,8221; he said.

Reacting to shareholders apprehensions, Singh said that 8220;returns could not be ensured in 12-18 months of operations and even the MNCs operating in India were of the view that returns could start pouring in only after 7-8 years.8221; One has to 8220;create brand equity and stabilise8221; to reachbreak-even point and then to gradually make profits.

He asked shareholders to give the company at least five year8217;s time and if the subsidiaries fail to make profits even after that then there was certainly something amiss.

8220;Overseas operations and subsidiaries were there to serve long-term interests of the company8221; and it was not the perspective of the company to 8220;live for year to year8221; basis, he said. The 8220;perspective of Ranbaxy was sustained growth,8221; he observed. He informed that many subsidiaries had reached the break-even point and by year 2000 others would reach this level and then these may start making profits. About US operations, he said that by year 2003, the size of operations would be between 100 million and 120 million. More products were being registered.

Singh said that he was 8220;quite bullish8221; about Chinese operations, but agreed that only a limited range of products had been introduced in China.

About Russian market, he observed that 8220;there was no light at the end of the dayeven today.8221; He said that company would, however, not withdraw from Russia. The idea was neither to withdraw from Russia nor to go in for reckless expansion but to 8220;keep Ranbaxy8217;s presence in Russia.8221; He hoped that in the long-term, when the whole climate stabilises, Russia would be a good market and then the company could attain 8220;full speed8221; in operations.

Story continues below this ad

Allaying fears of investors on Rs 330 crore in subsidiaries, Dr.Parvinder Singh observed that quot;returns were not very poorquot; and once brand equity was created and operations stabilised, in 2-3 years most of these subsidiaries would achieve a break even point and then register profits. The very perspective of Ranbaxy was quot;long-termquot; and not to quot;live for year to year. Singh said Ranbaxy faces three major challenges on which the company8217;s future will depend 8211; the results of its research and development initiatives; business related challenges since the company has entered into overseas markets such as USA, UK, China, Russia and is now looking at Braziland France; human resource development for integration of employees of the company which come from different cultures so that they think alike.

Singh said the financial performance of the company would improve in the current financial year ending December, 1999. 8220;There has been a recovery in the second quarter,8221; he said. Singh said turnover and net profit should be better this year.

On reports of talks with some foreign pharma companies for sale of his stake, Singh said: 8220;It has been pure media speculation. Why should I comment on speculation.8221;

Singh said he would continue to remain deeply involved in strategy, policy and discovery of new drugs in his capacity as chairman. He would also focus on insurance and hospital projects. Fortis Healthcare, a closely held company of Singh, is setting up a hospital at Mohali in Punjab in collaboration with ILamp;FS.