Lessons for India Inc from the Singh brothers

In a couple of months, it will be a decade since Ranbaxy was sold to Daiichi Sankyo of Japan. While the issues between the Japanese pharmaceutical major and the Singh brothers of the then Ranbaxy are still to be resolved, leaders from corporate India are beginning to pick up some lessons from them.

There is little denying that the two brothers - Malvinder Mohan Singh and Shivinder Mohan Singh - are both bright, young and intelligent individuals with education from some of the best institutions. On top of that, they inherited a legacy from their father Parvinder Singh, and a company with it. Students of family-led businesses, as well as some family business leaders,  tell us that inheritance is a responsibility and it is binding upon the inheritor not to think that he or she is creating wealth but that they are the trustees of this wealth and need to preserve it. Afterall, that is the reason, companies like the Merck in Germany continues to be in its 13th generation.

The Singh brothers, had this base to start with and both apparently had aspirations to build global companies. Thanks to the deal with Daiichi Sankyo, they also got, shall we say, the cash to back their aspirations. What began thereafter is a huge cycle of acquisitions for both the companies that they were running - Religare and Fortis.

Both the companies began as local Indian enterprises with Fortis starting out as a single hospital entity out of Mohali but soon grew rapidly. Religare did some half a dozen acquisitions and seemed like it was headed to become a global financial services company. In fact, there was talk that it perhaps even aspired to become a bank one day. Fortis also grew, doing less than a dozen acquisitions, and at one stage had its presence in nearly 11 countries.

Companies were bought and many rapidly sold thereafter and today, both are back to their India operations. So, were they too aggressive with their aspirations or were some of them not thought out well? Afterall, in some cases, as with the Parkway acquisition in Singapore, assets were bought and sold in a matter of few months. Those in the media would remember that after every deal, the press releases showed it to be a good deal. If so, then where has all the money gone?

In the backdrop of these questions that many of the business leaders raised when asked about how they read the happenings with the Singh brothers, there are some lessons that most drew from the developments. Listed below are some lessons that were picked up by them:

1. Success is never permanent. Unless you build sustainability into the business, it will fail.
2. Focus on creating value for all stakeholders even if there is scope to do so for a select few.
3. Inheritance is a responsibility and it is up to the inheritors to preserve the wealth and the legacy.
4. As inheritors, you can milk the cow but cannot sell the cow if business continuity and intergenerational transfer of wealth and legacy are important.
5. Role of directors in listed companies becomes even more important.
6. Mergers and acquisitions is an art and not all are best placed to handle it.
7. Be ethical and show it. After all,  Caesar's wife must be above suspicion.
8. If not handled well, value maximization has a flip side called wealth destruction.