Why did Devkumar Vaidya sell out Zandu Pharma?

By Sishir Prasad , CNBC-TV18:

 

Devkumar Vaidya will not be a part of Zandu pharmaceuticals anymore. Despite making a tough choice, the promoter is happy with it.

 

With the face of his great grandfather Zandubhat Vaidya, after whom Zandu Pharmaceuticals takes its name, peering down from the 108-year-old Raja Ravi Varma painting, Devkumar Vaidya is trying to rationalize the fact that he won't be a part of Zandu Pharmaceuticals anymore. This deal wasn't just for money.

 

Devkumar Vaidya, Former Promoter, Zandu Pharmaceuticals said, "Yes, you need money for roti, but I sold it because I wanted the company to grow."

 

If Vaidya is to be believed, the sale was fuelled by the inability of the existing management to grow the company.

 

Paras, Emami, Dabur, Baidyanath, Himalaya said, "Companies like Paras, Emami, Dabur, Baidyanath, and Himalaya have been able to garner sales growth of 25-30%, and their profits have grown at 30-35% annually. Zandu in contrast, has grown at just 10%."

 

Devkumar Vaidya, Former Promoter, Zandu Pharmaceuticals said, "The industry has grown at a much faster rate than Zandu."

 

If the Parekh family, which had management control, did not deliver the results, Devkumar Vaidya could have surely pushed for a larger role in managing the company. But Vaidya has gone on record to claim that he was never allowed too much of a say in running the company.

 

Devkumar Vaidya, Former Promoter, Zandu Pharmaceuticals said, "I didn't have an opportunity."

 

Faced with the option of either remaining a dormant promoter, or selling off the company, Vaidya chose the latter.  The deal itself wasn't easy. It took almost eight years to find a partner.

 

Sources say that's because of the tough fight the buyer would face from the other promoters. We learn that at one point, even Dabur was interested. But that deal did not go through. Finally, Emami said yes.

 

Devkumar Vaidya, Former Promoter, Zandu Pharmaceuticals said that Emami is a very dynamic company.

 

With the sale, Vaidya's link with the company will only be his ancestor's name. But it does give him plenty of time to follow his passion: Aeromodelling.