In the strongest hint yet of a transition at Dr Reddy’s Laboratories Ltd (DRL), its founder and chairman Kallam Anji Reddy, for the first time in the history of the pharma major, chose to give the company’s annual general meeting (AGM) a miss on Friday.
K Satish Reddy, managing director and chief operating officer, read out the chairman’s message during the AGM here. He said his father was unwell.
But for shareholders, it was an unspoken truth that the succession is indeed happening now. “None of us are going to be here forever. Anji Reddy’s son is in his place now, reading the chairman’s message. He’s the chief,” said shareholder K Satyanarayana Sharma, adding, “Naturally, it’s a concern as the younger generation is for the generics business and wants to make a quick buck.”
Referring to recent reports in which G V Prasad, vice chairman and chief executive officer, didn’t rule out a possible stake sale if given an appropriate valuation, Ashok Chand, another shareholder who bought shares 28 years ago, said, “Reddy’s are good copycats and but there should be more than just going after products going off-patent. If one favours the generics business and the other research, unless both go together there’s bound to be a clash.”
Anji Reddy’s absence also evoked doubts among some shareholders over DRL’s future roadmap with analysts sceptical about the company’s revenue target of $2.7 billion this financial year. “It’s a good thing that the company is putting in a succession plan but it remains to be seen if the next management can take the company from $2 billion to $3 billion,” said Shantilal Shah, a shareholder.
Interestingly, last year, in what could be termed as an indication of his easing grip on the company he founded in 984, Anji Reddy sold all his remaining 600,956 crore equity shares to Dr Reddy’s Holdings Pvt Ltd for Rs 98.36 crore. As of Sept. 2011, the pharma pioneer had only a 0.35 per cent stake in DRL in his individual capacity. This fell to zero as of Dec. 2011 as per the company’s shareholding data published by the Bombay Stock Exchange.
The promoters hold 25.61 per cent in the company, 23.08 per cent stake through Dr Reddy’s Holdings Ltd and 2.53 per cent stake through other entities.