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New Delhi: Ranbaxy Laboratories and Daiichi Sankyo on Sunday announced that Malvinder Mohan Singh has stepped down from the positions of Chairman, CEO and Managing Director of Ranbaxy with immediate effect.
While the Singh family had sold their entire equity stake in Ranbaxy to Daiichi Sankyo in 2008, it was announced at that time that Malvinder Singh will continue at the helm till 2013. The decision to quit the company four years ahead of schedule signals the end of the long association between the Singh family and the pharmaceutical company.
Atul Sobti, currently Ranbaxy's Chief Operating Officer, has been appointed as CEO and Managing Director. Dr Tsutomu Une, Non-executive Director of Ranbaxy, has been elected as Chairman of the Board.
Sobti said that it was Singh's personal decision to step down. "It is Malvinder's own decision to step down which he communicated to the Board. The Board, during the meeting today, accepted his decision," said the new CEO. Singh is entitled to around Rs 45 crore as severance package for leaving the company before finishing the five-year term.
Sources within the company said that Singh wanted to focus on the family's financial services company Religare Enterprises and the healthcare company Fortis Healthcare, which he co-owns with his brother Shivinder Mohan Singh.
A press release issued by the company quoted him as saying, "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 the initial transition phase that followed Daiichi Sankyo's acquisition of majority shareholding interest in Ranbaxy has been completed successfully; and that the company's excellent team of management colleagues are well-positioned to take full advantage of the company's growth opportunities."
Singh's exit comes at a time when Ranbaxy is facing severe operational pressure. The company has for the first time in its history recorded losses in three successive quarters. This followed a move by the US Food & Drug Administration to ban 30 drugs made at Ranbaxy's two plants for fabricating test results.
In addition, the company has been saddled by mark to market forex losses. Its net loss in the quarter ended March 2009 was in excess of Rs 750 crore. The company's share price has crashed from Rs 613 in June 2008 to Rs 220 at close on Friday, May 22 on the BSE.
Sobti, however, said that the company has a strong management team which will lead the pharmaceutical major into the next phase of growth. The company said that it is expected to wipe out the forex losses in the next quarter.
"Ranbaxy has had professionals run the company in the past even when it was owned by the Singh family. While Malvinder cannot be replaced, we are looking at accelerated growth going forward," Sobti said.
Two other members, close to the Singh family, have also stepped down from Ranbaxy's board. They are Sunil Godhwani, CEO and MD of Religare Enterprises, and Balwinder Dhillon.
Commenting on these changes, Takashi Shoda, a director of Ranbaxy and the CEO of Daiichi Sankyo, which owns 63.92 per cent of Ranbaxy's 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. We wish him continued success as he pursues his many other business interests."