Ranbaxy Scales Down Treasury Operations

Pharma major Ranbaxy Laboratories Ltd has de-risked its treasury operations, which involves deploying the company's surplus cash in the money markets.

As a result, the company has reported a sharp decline in its treasury income during the last financial year. Its interest income fell from Rs 72.11 crore in 2000 to Rs 9.92 crore in 2001.

Ranbaxy chairman Tejendra Khanna, in the company's annual report for 2001, said the fall in treasury income has resulted from the company's decision to de-risk its treasury operations.

Ranbaxy executive vice-president (finance & corporate services) Vinay Kaul did not respond to queries sent to him by e-mail. However, sources in the company said Ranbaxy will be deploying its surplus cash in its international operations. The company is also looking at more acquisitions, promotion of new brands as well as the launch of its new consumer healthcare division. Ranbaxy has set itself the target of becoming a $1 billion company by 2006 and has accordingly set itself a very ambitious investment plan.

 

The decision comes after reports that the company, through its subsidiary Vidyut Investments, had funded entities connected with the stock broker Ketan Parekh's group on a short-term basis and also traded in K-10 scrips. According to reports, the company had traded in significant quantities in scrips of DSQ Software, Global Telesystems, Pentamedia Graphics, Satyam Computer, Silverline Industries and Zee Telefilms during the period under investigation by the Securities & Exchange Board of India. In 2001, Vidyut Investments Ltd, incurred a loss of Rs 2.46 crore as against a profit of Rs 34.59 lakh in 2000.

"The company has decided to move away from the money market because of the bad name it earned in the Ketan Parekh scam and also because of the money it lost after the stock market crash," the source told Business Standard. According to industry sources, the company has decided to adopt a new treasury management strategy.

It is worth noting that, in spite of a drop of almost Rs 63 crore in interest income, Ranbaxy recorded a significant jump in its profit after tax from Rs 182.43 crore in 2000 to Rs 253.34 crore in 2001 -- a jump of almost 40 per cent.