The received wisdom from the gurus tracking family-led businesses has always been that professional managers who run the operations of a company are ill-equipped to answer questions about the dealings of their promoter family. But then, how concerning, if not deadening, can the effect be for these managers if they are greeted every few days with newspaper headlines that scream of promoters in talks to sell their stake? Or when analyst reports spray them with speculative scenarios or when enthusiastic recruiters reach out?
Cipla, one of India’s oldest companies and known by its low-cost generics crusader scientist promoter Yusuf Khwaja Hamied, has been in the news for several months now over reports that the promoter family of the company wants to sell its stake. The company, led by Hamied’s niece Samina Hamied has remained tight-lipped on this and so far dismissed the reports as mere speculation.
Ask Umang Vohra, the global CEO of Cipla has been a numbers man all along, on what such uncertainty means and whether it makes him anxious or concerned at all and he says, “it is a distraction and it will not impact the company or its capex plans. This is because Cipla has always believed in investing for the future and capex in any case is something that feeds the business.” However, he does say, ”yes, as a human being, I am definitely anxious because many things could depend on it. After all, as individuals, we work in the organisation and it is just that concern that if that distraction creates difficulties in the way we engage with each other and with the organisation then that to me would be the biggest impact (at a personal level) of this uncertainty.”
Umang Vohra was responding to a question from this writer at a media interaction to announce the second quarter numbers of the company.
On the question from this writer on what the company would want to do with the large pile of cash it was sitting on, he said: “The strategy is obviously to invest in capex. We have got about Rs 5,800 crores now on the books and M&A in India will continue to be a strong emphasis and focus for us for a few key areas.”
The company reported a good set of numbers in the second quarter with revenues up 14.6 per cent year on year (YoY), profit after tax up 43.4 per cent YoY and most importantly, a high EBITDA margin of 1,734 crore for the quarter and up 33.1 per cent YoY.
The fact that while discussing the uncertainty, Vohra spoke of only of no impact on capex, tracking the shape of things on the M&A front may therefore be the elements to watch out for now. But then, many within the industry and those tracking it from outside, apparently feel the track record of the company, run by professionals and guided by a strong board is unlikely to see any discussion on the promoter ownership impacting its performance.
