Succession Planning at Ranbaxy - Family Drama, Corporate Style
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Case Details:
Case Code : HROB057
Case Length : 18 Pages
Period : 2000-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Ranbaxy
Industry : Pharmaceuticals
Countries : India
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"The question, however, uppermost in most people's mind
is: (that) does the decision reflect a tussle between the promoter and
professional management in which the promoter eventually had his way."
- An analyst, commenting on the Ranbaxy succession planning
issue.1
"The succession plan was driven by Mr Brar (D S Brar,
outgoing Managing Director and CEO) himself and he has been close to the family
for so long."
- Malvinder Singh, President Pharmaceuticals and the elder
son of Ranbaxy founder, the late Parvinder Singh.2
"It is a rather uneventful development in that it is part
of a succession plan and the transition will be smooth."
- D S Brar, Outgoing Managing Director and CEO, Ranbaxy
Laboratories Ltd.3
An Un-Expected Departure?
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In December 2003, S D Brar (Brar), CEO and Managing Director of Ranbaxy
Laboratories Ltd., (Ranbaxy)4 announced
his decision to resign from his post. Brar was to complete his tenure in July
2004. He named Dr Brian Tempest (President, Pharmaceutical Division, Ranbaxy) as
his successor.
Brar's decision to step down generated mixed responses from industry watchers,
analysts and the investor community. Some media reports claimed that Brar's exit
from the company was a result of the strained relationships between Ranbaxy's
professional managers and the promoter family.
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A few analysts said that Brar had no choice but to leave the company as
Malvinder Singh and Shivinder Singh (sons of Ranbaxy's founder, the late
Parvinder Singh, and owners of more than 32% of stake in the company) wanted
to establish their control over the management of the company.
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Official sources denied this, stating that a succession plan had
already been put in place, and that Brar's resignation was a part of
that plan. However, the controversy regarding Brar's departure
refused to die out.
Meanwhile, Ranbaxy's stock price fell on speculation about whether
Ranbaxy would be able maintain its strong growth without Brar at the
helm.
It was under his leadership that the company had evolved from a
small Indian pharmaceutical company into a truly global
pharmaceutical major. |
Succession Planning at Ranbaxy - Family Drama, Corporate Style
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