For Malvinder Mohan Singh change is the only constant when it comes to business. In mid-2008, he shocked the corporate world by off-loading the entire promoter’s holding in Ranbaxy Laboratories in favour of Japanese Pharma major Daiichi-Sankyo for about Rs 10,000 crore. That deal came as a real shocker as everybody was speculating about Ranbaxy acquiring some big pharma company to expand its pharma business in the global space. Not many realized that the Ranbaxy promoters were willing to offload their core business and risk entering into newer business areas. Also there was a lot of sentimental value involved as Ranbaxy was started by their grandfather Bhai Mohan Singh and nurtured well by father Parvinder Singh. Yet business sense prevailed over sentiment to drive the value proposition for the stakeholders.
When we look at the way the Singh brothers are doing business, we find a lot of similarity between them and Rajiv Bajaj of Bajaj Auto. When Rajiv Bajaj decided to discontinue scooters from Baja Auto’s portfolio of products it surprised many including his father Rahul Bajaj. Here, again, sentiment did not cloud pragmatic and sound decision making. Recently, Rajiv Bajaj announced that he would be doing away with the Bajaj brand name for motorcycles, another shocker from Bajaj.
Something similar was done by Singh brothers on April 06, 2010 when they announced that they would step down from the board of Religare Enterprises (REL), the largest listed company from the Singh brothers having a market cap of Rs 5,000 crore. Not only did they step down from the board, they also handed over the management control to one of their close friends Sunil Godhwani. In Indian corporate history, there are not many examples where promoters have handed over control of their business (that too in a company having highest market cap) in the hands of independent professionals. It requires courage of conviction and is a big risk not many Indian promoters are willing to take.
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