WEATH­ER­ING THE STORM

COM­PANY: Wock­hardt Ltd DES­IG­NA­TION: Man­ag­ing Di­rec­tor AGE: 44

Business Today - - COVER STORY - P. B. JAYAKUMAR

Un­like many of the In­dia Inc. suc­ces­sors who had got smoothly run­ning com­pa­nies on a plat­ter, Ha­bil Kho­raki­wala’s younger son Mur­taza faced a tough be­gin­ning. His el­e­va­tion to the role of man­ag­ing di­rec­tor in April 2009 came at a time when Wock­hardt was pass­ing through the worst-ever cri­sis in its 50-year his­tory.

Of course, his ar­tic­u­late and as­sertive fa­ther has seen many ups and downs in the course of his busi­ness ca­reer. But since Mur­taza was a soft-spo­ken, unas­sum­ing ex­ec­u­tive, many doubted his ca­pa­bil­ity to steady the trou­ble-torn com­pany. Till that time, he pre­ferred to be in the shadow of his il­lus­tri­ous fa­ther and was never pro­jected as the face of Wock­hardt.

One of the top do­mes­tic phar­ma­ceu­ti­cal com­pa­nies, Wock­hardt was then strug­gling un­der a debt load of `3,700 crore plus due to a se­ries of bad but ag­gres­sive ac­qui­si­tions. Worse still, its mar­ket cap­i­tal­i­sa­tion had fallen to just over `900 crore. In a bid to put the com­pany back on track, Mur­taza was named MD – an ad­di­tional re­spon­si­bil­ity his fa­ther and founder chair­man Ha­bil was hold­ing till then. The pharma ma­jor also de­cided to un­dergo a cor­po­rate debt re­struc­tur­ing ( CDR) span­ning three years.

Ward­ing off the cri­sis re­quired learn­ing from mis­takes as Mur­taza and his fa­ther de-risked the com­pany’s over-de­pen­dence on the Euro­pean mar­ket. They adopted or­ganic growth strate­gies to ex­pand in the emerg­ing mar­kets and also in the US. The In­dia mar­ket was tar­geted with vigour and so was re­search and de­vel­op­ment to give Wock­hardt a com­pet­i­tive edge.

Selling a num­ber of as­sets was an­other strate­gic move. Wock­hardt sold its Ger­man sub­sidiary Espharma (bought in 2004 for `49 crore) to Mova GmbH for `120 crore. Its vet­eri­nary busi­ness with rev­enues of `77 crore was sold to French com­pany Ve­to­quinol for `170 crore while the nutri­tion busi­ness was sold to French multi­na­tional Danone for `1,576 crore. The fam­ily’s Dart­mour Hold­ings-owned Wock­hardt Hos­pi­tals sold off 10 of its 17 fa­cil­i­ties to For­tis Hos­pi­tals for `909 crore. That kind of cash in­fu­sion over the years helped Wock­hardt re­cover its fi­nan­cial health and brought net debt to 0.18 per cent with a cash bal­ance of about `1,000 crore by 2014/15.

All these ef­forts have borne fruit and af­ter eight years at the helm, Mur­taza is now able to breathe eas­ily. “In 2012, Wock­hardt be­came a rare CDR suc­cess story and its share prices jumped more than 300 per cent in one year,” he re­calls.

Cur­rently, 62 per cent of the rev­enue comes from abroad as against the ear­lier 70 per cent or so com­ing from the Euro­pean mar­ket. In ad­di­tion, Wock­hardt now has five drugs at var­i­ous stages of de­vel­op­ment and to­gether, they make one of the most com­pre­hen­sive an­tibac­te­rial pipe­lines. In con­trast, pharma ma­jors like Merck, Roche, As­traZeneca and Glax­oSmithK­line have just one prod­uct in the pipe­line. With the global anti-in­fec­tive drugs mar­ket val­ued at $40 bil­lion, the com­pany may soon hit the growth but­ton as never be­fore.

In 2012/13, the com­pany posted its high­est-ever sales of `5,610 crore and a net profit of `1,594 crore af­ter many years of losses. In 2015/16, con­sol­i­dated sales stood at `4,461 crore with a net profit of Rs 325 crore, fall­ing slightly short of pre­vi­ous year’s rev­enue of `4,481 crore and net profit of `405 crore. In­vestor con­fi­dence is also back and mar­ket cap­i­tal­i­sa­tion stands at over `8,000 crore.

BRAVE AND BAT­TLE-READY

That the shuf­fle at the top worked out so well in terms of re­vival should not take one by sur­prise. Mur­taza was no green­horn when he was asked to take on the man­tle. Af­ter get­ting his med­i­cal de­gree from GS Med­i­cal Col­lege, Mum­bai, and do­ing an MBA from the Uni­ver­sity of Illi­nois, the young doc­tor had im­me­di­ately joined Wock­hardt Europe and looked af­ter the busi­ness for a cou­ple of years. Af­ter mar­riage, he

shifted base to In­dia and started look­ing af­ter the do­mes­tic busi­ness.

“I have been with Wock­hardt for nearly 15 years now. The en­ergy, pas­sion and in­spi­ra­tion within the com­pany were so strong that I just got pulled in. I never re­gret the de­ci­sion to join Wock­hardt and not get­ting any out­side ex­pe­ri­ence,” says Murtza.

He has two more sib­lings – el­der brother Huza­ifa Kho­raki­wala who heads the Wock­hardt Foun­da­tion and sis­ter Za­habiya Kho­raki­wala who is in charge of the un­listed Wock­hardt Hos­pi­tals.

Mur­taza says his proud­est mo­ment as the MD has come with Wock­hardt record­ing a strong per­for­mance in In­dia branded busi­ness for the past three years. The com­pany out­per­formed the in­dus­try and grew by more than 25 per cent for 2013/14 and 2014/15.

But all was not well in the fi­nan­cial year ended March 31, 2017. The In­dia busi­ness growth slumped to 10 per cent, mainly due to de­mon­eti­sa­tion and price con­trols. The com­pany’s re­cov­ery was also ar­rested over the years as it grap­pled with com­pli­ance is­sues raised by the US Food and Drug Ad­min­is­tra­tion ( USFDA), which af­fected its plants at An­klesh­war, Chikhalthana and Waluj. Its U.S. unit also got a warn­ing let­ter from FDA for vi­o­la­tion of norms. Trou­bled by the sub­dued busi­ness in the US, de­mon­eti­sa­tion in In­dia and con­tin­u­ous re­me­di­a­tion costs, Wock­hardt posted losses of `21 crore on sales of `3,151 crore dur­ing the first nine months of the fi­nan­cial year 2017. The share

prices, which hov­ered above `1,000 per share in April, has now fallen to `720 per share.

Mur­taza re­mains un­daunted, say­ing his il­lus­tri­ous fa­ther is “an ocean of knowl­edge, ex­pe­ri­ence, busi­ness acu­men, vi­sion and en­trepreneur­ship” and he had learnt a tremen­dous lot from Se­nior Kho­raki­wala when he was groomed for the top job. “It is up to me how much I can im­bibe and as­sim­i­late. I greatly ad­mire his vi­sion, the way he thinks ahead of time, looks into new trends as they emerge and un­der­stands how they will shape the future as they un­fold,” he says.

“I have to take for­ward the legacy my fa­ther has built over the past 57 years. This may be chal­leng­ing, but I look at it as an op­por­tu­nity to take the com­pany to the next level on the global map,” says Wock­hardt’s next Kho­raki­wala.

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