Key staff loss haunts Ranbaxys India ops

Written by MG Arun | Mumbai | Updated: Dec 29 2011, 08:03am hrs
Daiichi Sankyo-owned Ranbaxy Laboratories woes are not restricted to the US market alone, where the company paid $500 million to the federal drug watchdog to settle a long-pending compliance dispute. Its India operations, which shifted out of Ranbaxys Gurgaon headquarters to Mumbai a year back, is seeing an exodus of key management personnel, which experts said will hurt its business. India is Ranbaxys second largest market after the US, contributing around R2,500 crore or 20% of its total sales.

V Vijayendran, one of the business heads reporting to the chief executive of India operations, Yugal Sikri, has left the company, while another, Mahendra Bharadwaj, was tranferred to Africa. Rajbir Sandhu, head of the pharmaceutical strategic business unit (SBU), the largest, has left to join Alkem, a mid-sized pharma firm in Mumbai. Both these positions have not been filled up, instead, other senior SBU heads have been redesignated as cluster heads, so that they can handle more than one SBU.

In the organisational hierarchy, the company has 15 SBUs, like pharma, cardiovascular and intensiva (for hospitals), and heads of these SBUs report to the two business heads, who in turn report to Sikri.

Debajit Sensharma, the CFO for the India operations, has left the company to join a small pharma company in Delhi and so has Dinesh Jumrani, the second senior-most in HR, who moved on to Alkem. Rajiv Roy Chaudhury, who used to head commercial and logistics, has left to join BAE Systems in Delhi as finance director.

There is so much resentment among around 150-180 senior executives who were shifted to Mumbai, since it meant uprooting them and their families from Delhi, where they have spent much of their career, said one of the senior executives who left the company last year. Many more are on the verge of leaving. He did not want to be quoted as the matter is sensitive.

Responding to queries from FE, a Ranbaxy spokesperson said, given Ranbaxys concern for its employees, the relocation of staff to Mumbai was handled with the greatest sensitivity and transparency. All manner of assistance was provided to employees in making this move as comfortable as possible, with the least amount of disruption.

These exits are over and above those of senior professionals like Ranbaxy Labs CEO Atul Sobti, CFO Omesh Sethi and global HR head Bhagwat Yagnik in the last one year, whose departure were seen as a changing of the old guard close to former MD and promoter, Malvinder Singh.

Daiichi Sankyo bought Ranbaxy for $4.6 billion in June 2008, and Singh stepped down in May 2009 to make way for the new MD & CEO Sobti, who quit the company in August 2010.

Experts said the exits also point to a culture conflict between the Indian company and its Japanese parent. The Japanese follow a board room driven, democratic and professional approach, which is different from the personal and entrepreneur-driven style of many Indian businesses, a Delhi-based management consultant said.

Ranbaxy had a different DNA under Malvinder. He should have ideally continued, since Ranbaxy now lacks able leadership, he added. He cannot be quoted as he is not authorised to talk on specific companies.

Japanese companies manage HR better when they build business from scratch here, experts say. Maruti Suzuki is a wonderful model because the business was built from scratch, said Seiji Ota, a partner with BMR Advisors and an expert on Indo-Japanese business. I believe that if given enough freedom, Indian managers will show their mettle.

The global and Indian businesses call for two different approaches, say experts. The Japanese way of management suits Ranbaxys global operations better, said Navroz Mahudawalla, MD of Candle Partners, a boutique investment management firm.

Ranbaxy said that following co-location, its attrition levels have been very much in line with previous trends and are comparable with industry. A recent employee satisfaction survey, revealed that members of the staff have adjusted well to the change, it claimed.

The Ranbaxy spokesperson said Mumbai was the natural choice being the base for the majority of top pharmaceutical firms. Ranbaxy has been in a scale up mode and the easy availability of additional talent in Mumbai was an important consideration. This has since been validated and we have increased our staff strength, in Mumbai, by a third, in the last two years, he said. Ranbaxy has a staff strength of around 5,000 in India of which its field force is around 3,000.