Ranbaxy on trial

Like most sub-cultures, business journalism has its own jargon; insiders use cryptic phrases that mean little to people outside the loop. During the 1990s, "feuding sardars inc." became part of common parlance in business bureaus.

It was shorthand that referred to the Mohan Singh group. The patriarch Bhai Mohan Singh and his sons, Parvinder, Analjit, and Manjit, were engaged in a bitter, public power struggle. At stake was control of Ranbaxy and the rest of the corporate empire built by the erstwhile Rawalpindi-resident.

Family disputes over property are scarcely new in India. But the creative destruction unleashed by liberalisation led to an increase in the frequency and intensity of such scraps.

DNA-based managements were generally caught flat-footed as the old paradigms of the licence raj vanished. This led to deep divisions within families and massive destruction of shareholder wealth.

Ranbaxy would have been typical except for one remarkable detail. The company grew at breakneck speed even as the eldest son elbowed out his two younger siblings and his father in a series of boardroom battles.

The late Dr Parvinder Singh managed to impose his vision of a research-driven, globally-oriented corporation while fighting a losing battle with cancer and simultaneously warding off challenges from his kinfolk.

In retrospect, Parvinder hardly put a step wrong""in the business sphere, at least. The $1.18 billion turnover of the NYSE-listed pharmaceutical major and its professional management structure are an impressive legacy.

His sons are the main shareholders but the CEO is an outsider""a combination rarely seen in Indian boardrooms.

Remarkably, Bhandari's corporate biography never attempts to gloss over the nastiness of the 1990s. Nor does it descend into hagiography. It would have been easy to head in that direction, given the genre and the extraordinary achievements of the clan holding centre stage.

The book faithfully tracks Ranbaxy through the five decades it took to morph from a small distributor into a global manufacturer.

The story is linked to the fortunes of one family, so it's inevitably a business biography of the entire clan. The focus is on Mohan and Parvinder but Analjit and Manjit get their share of attention.

Bhandari had the job of accessing every player in the drama and each, naturally enough, produced his own spin on events. Sorting things out wouldn't have been quite as messy as Rashomon but it must have come close.

The author succeeds in maintaining his distance while presenting all the viewpoints, which is a commendable feat in itself. To the best of my knowledge, this is the first time an independent corporate biography, as opposed to a hagiography, has been attempted in Indian publishing.

Credit is unquestionably due to the Mohan Singh clan for allowing Bhandari to sort through their collective dirty laundry and paint his portraits, warts and all.

The story contains enough masala to fuel several potboilers and Bhandari tells it competently, if not compellingly. In a nutshell, Bhai Mohan Singh arrived in post-partition Delhi in marginally better financial shape than many of his West Punjabi compatriots.

He had a natural talent for making friends. His little nest egg and his networking skills stood him in good stead as he rebuilt his fortune.

In the early 1950s, Mohan took over a company called Ranbaxy, whose owner owed him money. The takeover had its own murky aspects and Bhandari is upfront in admitting that he has placed only the Mohan Singh version on record due to his inability to trace the family of the previous owner, Gurbux Singh.

At the time, Ranbaxy was distributor for a few drugs. Mohan Singh built manufacturing capacity and licensed drug manufacturing from various multinationals.

His skills at handling the licence raj gave him a significant edge in that stiflingly regulated era. The first Ranbaxy mega-brand was Calmpose.

In 1970, India introduced drug process patents, creating new opportunities in reverse-engineering for domestic manufacturers. By then, Parvinder had completed his Ph D in chemistry and joined the company. The timing was great.

For two decades, Mohan and Parvinder formed an invincible team. With his scientists, Parvinder identified and reverse-engineered drugs. Mohan got the licences and interfaced with the babu-mantri nexus.

Ranbaxy remained staunchly patriarchal and very much a family concern even as it grew. Various family members and their connections sat on the board, maintained accounts, etc.

The two younger sons were gradually pushed out of the picture via a formal division of assets. Analjit created the Max India group while Manjit established the Montari group.

Both have done well enough but there is residual bitterness. Manjit, for example, wished to turn his hand to the hospitality business and blames Parvinder for blocking his efforts.

After 1991, the trouble between father and eldest son started. Parvinder wanted a research-driven company that looked abroad for both revenues and management structure.

He faced up squarely to the reintroduction of product patents while Mohan harked back to the protectionist attitude of the licence raj.

As we know, Parvinder won that battle and recast Ranbaxy in the mould he desired. Even after his death in 1999, the structure remained professional, with two successive CEOs being non-family members.

Right now, Ranbaxy faces new challenges. The longtime head of research has quit on the cusp of the new product patent regime. Maintaining momentum in the circumstances will be an acid test for Parvinder's vision.

Perhaps the next edition of this book will include a chapter on Ranbaxy's tackling of that challenge? The book certainly deserves a second edition""it illuminates the corporate landscape over five decades of dramatic change.

One should perhaps mention that Bhandari is a personal friend and works at Business Standard. In reviewing his work, I hope I've mirrored the objectivity he displayed in researching and writing it.

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The Ranbaxy Story

Bhupesh Bhandari
Penguin Viking
Price: Rs 450
Pages: 240