[sbinews] Ranbaxy - Brar to step down

  • From: sbistcbangalore@xxxxxxxx
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Tue, 23 Dec 2003 07:17:36 +0500

Ranbaxy's Brar steps down, markets taken aback

MUMBAI/NEW DELHI : The market is perplexed at the sudden announcement by 
Ranbaxy that DS Brar, its highly regarded CEO and managing director, will not 
seek to renew his contract, which ends in June ‘04. 

According to fund managers and analysts, the company is on the  threshold of 
achieving robust growth over the next few years. The decision to quit by the 
man at the helm has shocked market participants. 

The mood in the market ranged from negative to neutral. “It is not very clear 
why he has decided to go. Since we are in a bull market, the reaction is not so 
visible,” a fund manager at a leading US-based mutual fund having a sizeable 
holding in Ranbaxy Laboratories said. 

A section of players said that one has to wait and watch what Mr Brar does 
after quitting Ranbaxy Laboratories. They are also waiting for the ‘real’ 
story. “We expect the real story will unfold over the next few days. One needs 
to know exactly what Mr Brar will do after he completes his term,” according to 
an analyst. 

“If he continues to sit on the board as a director, it will be a positive. 
However, for the moment it is not easy to make anything out of the action as 
power equations continue to shift in large organisations,” a pharmaceutical 
analyst said. According to a Delhi broker, a large company and its performance 
can not be linked to one man alone. “Still, there will be some impact,” he 

“The markets are in such a euphoric mood and the sentiment is so strong that 
the market will discount any bad news,” said an FII source. “We cannot ask an 
investor to pull out of Ranbaxy because the CEO has decided against seeking an 
extension of term. That will create panic in the market,” said a fund manger. 

The Ranbaxy scrip, which has risen 76.7% since April 1, may also react to 
another news flash about UK-based pharma companies association’s intention to 
sue Ranbaxy and a clutch of other firms for over pricing of drugs. “The damage 
there is expected to be huge so that may be a trigger,” said the head of 
investments at a mutual fund. 

The company informed the exchange about the development today itself, and the 
scrip did see some erosion to Rs 1,121.40, from Rs 1,124.25 on Friday. The 
entire pharma sector has performed well on the bourses in the current bull-run, 
but Ranbaxy has been at the forefront among its peers. 

Dr Reddy’s share has seen a jump of about 50% and Cipla 77% since April. BSE 
pharma has seen a 200% increase in value, while the sensex has risen 81%. 

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