Singh brothers: Inverse Midas touch

PT Jyothi Datta | Updated on: Oct 13, 2019
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How the scions have taken Ranbaxy to a new low

In closed industry circles, they are calling it an “inverse Midas touch” of sorts. Because it’s not one or two but three major companies that have had to navigate troubled waters and all three once bore the imprint of the erstwhile Ranbaxy promoter-family scions, Malvinder Singh and Shivinder Singh.

As the latest round of corporate intrigue and court cases play out, this time involving financial firm Religare, the extended family of Ranbaxians who had worked with the visionary late Dr Parvinder Singh are saddened at the deteriorating developments involving his sons. Dr Singh, second generation of the Singh family and father of the brothers, is credited with charting out an international vision for Ranbaxy, a home-spun pharmaceutical company.

Family feuds were witnessed under Dr Singh as well, but the present saga takes them to a new low. Dr Singh passed away in 1999 and much turbulent water has flowed under the bridge since.

Ranbaxy was sold twice over. First to Japanese drugmaker Daiichi Sankyo in 2008 for $4.6 billion, who in turn sold it to Sun Pharma for $4 billion in 2014. There is an ongoing feud between Daiichi and the Singh brothers involving an arbitration award of ₹3,500 crore, payable to the former. Daiichi believes it was kept in the dark on the regulatory troubles that erstwhile Ranbaxy had in the US, an allegation the brothers have contested.

Diversion of funds

Cut to Fortis, the hospitals-network the Singh family promoted. It was nearly sold to Manipal Hospitals and then finally sold to Malaysian-group IHH Healthcare Berhad. Here the brothers faced allegations of fund diversion of about ₹400 crore.

And, last week, Shivinder and Malvinder were arrested by the Delhi Police’s Economic Offences Wing on allegations of diverting over ₹2,300 crore from Religare Finvest Ltd (RFL). Among others arrested was Sunil “Sunny” Godhwani, once seen to be close to the Singh brothers; Godhwani was former CMD of Religare.

Relationships have unravelled ever since the going got tough, with Daiichi digging in on the arbitration award. The brothers got into a physical fight in public last year and the family had to intervene to call a truce. In recent off-record conversations with people close to the Singh brothers, the name of Godhwani still comes up, but with less reverence.

Maze of dealings

Investigations will reveal who did what and on whose bidding. The present maze of financial dealings show investments into real-estate. Links with the Radha Soami Satsang Beas (RSSB) are also being probed. The Singh brothers’ maternal family members have headed the RSSB. And in 2015, Shivinder stepped down from heading Fortis to do “ sewa ” at the RSSB. Industry-watchers questioned the timing of the decision and sniffed a possible strategy to try and blunt the impact of the Daiichi case.

Healthcare executives point to the maze of companies and holdings that were unravelled in the process of selling Fortis. Former Ranbaxians insist, this is the generational shift. The intent of the old Ranbaxy was to focus on growing as an international pharmaceutical major, not become a financial player. Project Garuda in 2002, they point out, was to carry forward Dr Singh’s internationalisation plans of the pharmaceuticals business.

But detractors had to stay silent in 2008 when the Singh brothers sold their entire stake in Ranbaxy, even as the economic downturn took its toll on industry. The brothers were hailed for their Midas touch, their ability to time-out and make money, sans emotions. That praise though stands turned on its head today, as bystanders watch another corporate family battle it out.

Published on October 13, 2019

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