Malvinder Singh steps down, Sobti new Ranbaxy CEO

Written by Corporate Bureau | New Delhi | Updated: May 25 2009, 06:48am hrs
Nearly a year after selling his familys entire 35% stake in the countrys largest drug manufacturer, Ranbaxy Laboratories Ltd, to Japanese firm Daiichi Sankyo, Malvinder Singh on Sunday stepped down as the companys chairman, CEO and managing director. Daiichi Sankyo director and Ranbaxy board member, Tsutomu Une, has been appointed as the executive chairman of the company while, Atul Sobti, the current COO has been appointed the new CEO. The changes were announced after the companys board meeting on Sunday.

With this the Singh familys association with the company, which his grandfather Bhai Mohan Singh founded in 1961, comes to an end. Singh had joined Ranbaxy in 1998 and became CEO in 2006.

Interestingly, Singh had last year assured that he would continue at the companys helm of affairs for a minimum of five years.

Although both Ranbaxy and Daiichi maintained that the decision was mutual and amicable, sources said the burden of mounting losses of Daiichi, which was recently attributed to erosion of the share value of Ranbaxy and the series of regulatory problems with the US FDA may have led to Singhs premature exit. His tenure was scheduled to end in 2013 and he was entitled to a severance package of Rs 45 crore ($9.6 million) if he left the company earlier. However, on Sunday when Une was asked about the severance package, he only said that the company would proceed according to the employment agreement.

On Sunday, along with Singh, two more Indian board membersBalwinder Singh and Sunil Godhwani also stepped down. The newly cast board has seven members against the earlier strength of 10.

Commenting on these changes, Takashi Shoda, CEO of Daiichi Sankyo, which now owns 63.92% of Ranbaxys outstanding shares, said, We very much appreciate the efforts of the Singh family, which grew Ranbaxy from a small, local Indian company to the large multi-national company it has become today. Singhs strategic vision and passion for the pharmaceutical industry will be missed in Ranbaxys operations.

Newly appointed CEO Sobti said Ranbaxy would remain a listed company. Industry experts termed the development inevitable but sooner than expected. Some even predict that the development could actually impact the company scrip positively.

It was a difficult decision to separate from Ranbaxy. But it was the right time for me to do so. I leave with complete confidence that initial transition phase followed Daiichis acquisition of majority share holding interest in Ranbaxy has been completed successfully, Singh said.

Daiichi Sankyo earlier this month had reported an annual net loss of $3.45 billion due to a write down of its $4 billion (Rs 20,000 crore) investment in Ranbaxy. The Japanese company also said it is taking the USFDA ban very seriously and has constituted a team of experts to address the issue.

Ranbaxy has posted a net loss of over Rs 750 crore in the quarter ended March 2009. The company follows the calender year as its financial year.