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Editorial: Few comeback kids

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Business Standard New Delhi
Last Updated : Jun 14 2013 | 6:46 PM IST
The Singh family's impending exit from Ranbaxy, India's largest domestic drug company, after agreeing to sell its 34.8 per cent shareholding to Japan's Daiichi Sankyo, will enrich it by close to Rs 10,000 crore. This represents a significant amount of capital that can be invested in a new business or businesses. The question is whether the family will be able to repeat the Ranbaxy feat with the money it has earned. This is not to doubt the entrepreneurial skills of the promoter brothers, Malvinder "" who stays on as Ranbaxy CEO for an undefined period "" and Shivinder. After all, the brothers already have several other reasonably successful businesses within the group's fold. The finance company Religare Securities and the Fortis chain of hospitals are businesses that the brothers, rather than their father, have built and nurtured.

But the family does not have Indian corporate history on its side. Scan the corporate horizon and instances of Indian promoters selling an established business and making a comeback are thin on the ground. Start with the first big-bang exit "" when the tough-talking Ramesh Chauhan sold his successful Thums Up soft beverage business to Coke in the early nineties. That left him with his packaged water business, Bisleri. With its first-mover advantage, the Bisleri brand already had a monopoly of the business when Thums Up was sold. It has since continued to dominate the business against some formidable multinational competition. Beyond growing this established business (which may or may not have required additional capital), however, Chauhan has not been able to set up any new business of comparable magnitude after the Thums Up sale. This is also true of Rajeev Chandrashekhar, formerly of BPL and an early entrant in the burgeoning mobile phone services business. Having sold his business in the lucrative Maharashtra circle to the Essar group, he has since dabbled in a range of ventures from container trains to infotech companies. None of his businesses, however, is as yet in the same league as his mobile service business, though it might be argued that it is early days yet. BK Modi, who has served as an escort service to a range of foreign investors from Xerox to Alcatel, seems to have given up the battle altogether and is unabashedly enjoying life in the Californian sun on millions earned from hard-fought exit premiums.

The exception that has proved the rule is Malvinder and Shivinder's estranged uncle Analjit Singh. Till recently Singh was not especially noted for his business acumen. Following his high-profile stake sale in mobile phone company Hutchison Max (now Vodafone-Essar) for Rs 650 crore, he tried his hand at a range of businesses such as infotech and pharma, most of which have performed indifferently. However, the Hutch stake sale provided him the opportunity to turn his attention to two lucrative emerging industries "" health care and insurance. Today, his Max hospital chain and tie-up with one of America's largest insurers, New York Life, appear to be doing well and have a strong brand presence in their respective businesses. From a neutral perspective, both look ripe for disinvestment "" especially the capital-hungry insurance business that is eagerly awaiting a relaxation of foreign investment rules. That could test Analjit Singh's business acumen all over again.

Analjit Singh's example proves that business successes largely depend on spotting trends early "" and that depends on strategic vision rather than only on entrepreneurial skills. This probably explains why second comings are hard to achieve.

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First Published: Jun 17 2008 | 12:00 AM IST

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