Business Briefing 10/04

Evolution: Pharma to Finance to Hospitals; From the Horse’s Mouth

In an unusual move, Malvinder Singh, the owner of Religare, the financial services arm of the Delhi-based health to financial services conglomerate, has stepped down from all responsibilities that he had on the Religare board.

With his brother Shivinder Singh also stepping down, the firm will now be a totally professionally run company with no family representation on the board. Says Malvinder Singh, the outgoing chairman, “At Religare we have the systems in place, we have a clear growth path that will involve taking the financial services firm global, and in Sunil Godhwani, who is now chairman and managing director, we have an individual we fully trust.”

The empowering of non-family members and total absence of any family member on the board of a large firm is rare even in mature markets such as the US, where a full 40 per cent of the firms are family owned. The Religare board is likely to induct global members to strengthen businesses like private equity and mergers & acquisitions.

“This is a positive signal on the professional capability of management in India. When firms of large size make a move towards professionalising their board, it signals a comfort level and trust factor in the managerial abilities and the connect between the family and management,” says Anita Ramchandran, founder of Cerebrus, a Mumbai-based search firm.

Malvinder Singh will now focus on Parkway, the international healthcare giant he wants to build, while Shivinder will look at Fortis and its growth within India. Analysts believe that the move is timed well, given that the healthcare business is a unique model where a single firm is looking to expand in both India and markets abroad through an integrated hospital chain. In most healthcare models, it is the local side which dominates, and cross-border healthcare models such as hospital chains are an exception. However, with its Parkway acquisition, Fortis is now Asia’s largest healthcare company, claims Malvinder Singh.

“Ranbaxy was always an aberration when it came to corporate governance. It has never shown itself as a promoter-controlled, feudal company, and the Singh Brothers have continued that tradition,” says Poonam Barua, former India director of The Conference Board, a global corporate governance advocacy organisation.

Former US treasury secretary Hank Paulson was a key figure in America’s attempts to diffuse the mortgage and banking crisis of 2008. There have been several books that recount the days that the US government tried to tackle the collapse of Lehman Brothers, AIG and Freddie Mac and Fannie Mae. Some have portrayed Paulson as a villain who let Lehman fail because he was once its bitter rival Goldman Sachs’ CEO, others show him as a valiant firefighter who rescued the system. Now, Paulson gets to have his say thanks to On The Brink (Hachette, Rs 599). As the CEO of the investment bank Goldman Sachs, he was the chief of all the ‘masters of the universe’. When Paulson took over as the US treasury secretary, the equivalent of the finance minister in India, in 2006, he knew he was moving into a very different world. But Paulson had no idea that by 2008, he would find himself at the epicentre of the world’s most cataclysmic financial crisis since the Great Depression. Traditional banking and financial services behemoths that were the lifeblood of free market capitalism, teetered at the edge of collapse. He’s forced to use every weapon in his armoury—name dropping, coercion, international goodwill and arm twisting—to make Wall Street agree to swallow the bitter pill prescribed by his government. Paulson’s is a thrilling personal account, and insider perspective. It is as good as any tome written on the financial crisis.

Hank PaulsonMalvinder SinghReligareShivinder Singh