Tuesday, April 17, 2012

Consolidated - Comments on Surya Pharma Debacle

employees have not been paid. They have been forced to write resignations and have been

asked to leave else face consequences as confirmed by head HR Mr. Anshul PAl.

Mr. Anshul Pal confirmed to the press journalist over the phone and through an email that the company is downsizing

employees indiscrimanetly and plans to close down all plants and manufacturing facilities.

The black sheep in API exists in plenty and a lot of players fudge books by bribing SBI officials by sendng them huge gifts

and paybacks. Most MD's are involved in these affairs directly and presuurize their CFO's to take such actions as confirmed

by Hariom Bhatia ex CFO and Executive director Surya Pharmaceutcials over a phone interview.

Surya Pharma has been losing money since 3 years at the rate of 25 crs a month. they have been falsely booking invoices and

hyping up the top line and fudging inventory figures to raise working capital through nationalized banks Mr. Singla Finance

head for the group confirmed this statement when contacted by ET.

Mr. Sandeep Garg Company Secreatry confirmed that false Share beneficiary statememt is shared by the company with SEBi and

shares are falsely traded with the help of broker firms in Mumbai to hike the share price.

the aquisation of Activon was an eye wash.
reliable sources confirm that a large number of Surya pahrma shares have been pledged in foreign markets and the group

raised fresh capital, then where did all the money go? in buying 100 acre of land, Then ex CFO Bhatia confimed to the press

during a phone interview that The GDR issue was raised by the company.

Anil Kohli ex- head of business development confimed that the group always had malafied bad intentions and sold sub

standadrd products through middlemen.

various Independent Journalist have been trying to reach the MD office for comments but have not been successful.

Many C.A's after working in the pharma industry for a number of years start their own ventures thinking that industry management is all about financial jugglary. They don't listen to technocrats or technologists. They care the least to build up a sound base. In such set-up's, R&D, QA/QC etc are just name sake departments.Wait for some more time, you will see the collapse of many such bubble empires.
Posted by Sunny Master


Ultimately everyone loses when a business folds up - investors, promoters, customers and employees or is it nature's law of survival of the capable.
Posted by Anup Soans


When the focus shifts from satisfying customers to satisfying investors and lenders ...

Surely, there will be more "disguised" bankruptcies out there waiting for their masks to be shed.
Posted by Gopalkrishna Iyer

Thnks, Branding is must for performance and success.
Posted by Sanjay Upadhyay

@Prem: You have put it so precisely that it is difficult to add anything to it.

@ Anup: Nice reference. The model is broken as we can see it but the ones who are decision makers continue to believe in the model more and more as easiest way to make numbers. To me it appears that companies believing in it are sitting in a car having the brakes failed and going down the hill.

I agree with Prof. Vivek on need for branding.
'Branding is the only solution for perpetuity in long term performance and success'. While product branding helps reap profits from the product for a long time, the 'Company Branding' not only helps the company in increasing sales from existing products but also makes path safe for new introductions.

These things need special efforts and unfortunately very few appear to acknowledge it and fewer still would like or opt to take the path.
Posted by Dr. Ulhas Ganu

@ Mr Prem Goel...Your observations seem absolutely right.
It is mostly artificial productions/tradings/sales/ shifting, many of the Pharma giants believe in following; ultimately landing into Surya type of trap/ debacle.The same methods when tried to be imitated by small/growing companies, it is always at the cost of field/plant staff who are the ultimate sufferers because of the company's short comings and such a sad end.
Posted by Pramod Sharma

Number crunching is a practise adopted by all pharma companies today They are ruled not be technocrats but by CA and Legal teams THE BALANCE SHEET SHOULD LOOK GOOD

This is what happens, it internally corrodes into your capital base and may end up into bankruptcy

Very common in USA

We want to copy the US Life Style So we have copied this too?
Posted by PREM GOEL


According to Booz and Co report, 68% of Phama Executives believe that the current Pharma business model is broken.

Information is power and the power is shifting to patients - in the next decade this shift will have serious implication for the way in which medicine is practiced.

Pharma co has to shift from being drug sellers to healthcare companies who help people/patients live a better life, for which they will pay willingly and th e other major shift is govt will be one of the largest spender in healthcare in developing countries.
Posted by Anup Soans


There are many more which are likely to go the Surya Pharma way. Unless one builds strong brands through ethical marketing survivors in the coming decade will be very few.

Anup has rightly said that if the MCI and DoP and also the marketing guidelines set by IDMA and OPPI are strictly enforced, many more may close shop.
Posted by Prof. Vivek Hattangadi
Anthoer example to stregthen the belief to time perfectly for entry, diversification and exit in business. There are examples in Indian Pharma industry, where one went expanding aggressively and timed their exit perfectly. They are winners. Surya is a case of missed time to exit.
Posted by Amresh kumar
Surya had gone too far too fast.. meaningless M&A's ..senseless diversification.. just shows if u do not focus on the basics , you would be wiped out from the business


Surya was trying to fly high without first trying to stand and walk.
Pharma industry has no short cuts and going too much away from the pharma systems will lead to such situations.
Many companies have come, made lot of noise but ......... where are they after 2 to 3 yrs ,similar fate.
The problem is that because of weak top management the people down below are suffers in terms of their carriers,money and time.
Govt has to take some measures to avoid such situations in future as this is happening very frequently in pharma business.
Posted by Yogesh Mishra


Excellent observations Ravi Shanker and Mohan. It's true for many companies - they are run by number crunching accountants.

Every position and role requires different skill set and personality traits. This is why learning and development has to be a continuous process just like R & D.

You frankness is appreciated and if many executives say what they MUST say when they should say it, maybe they'll lose their jobs but at least they will not be part of these one man fiascos.
Posted by Anup Soans

I have worked in manufacturing industry that too in pharma for over four decades, most of them barring a few are one man army. The CMD'S may talk big of delegating power but ultimately the set up runs on their whims and fancies. Apart from this they keep their eyes shut and ears open where as it should be the other way. They believe in HARI RAM nayi's (remember Sholay the jailor always use to believe in Hari Ram nayi and that resulted in Jai Veeru break the prison). They won't change and Hari Ram Nayi's will flourish and the industries will doom
Posted by Mohan Naidu

As we knows that Management is a process where leadership is a quality, which they don't have, rather i would says this big pit falls in their bussiness is because of their over dependency on their finance peoples, where most of them were not aware about the business process which they were heading. Launch of divisions is not an issue but it should be closely watched & monitored by the management through sales review meetings with divisional heads on regular interval to analysis status of growth or to analysis the reason of de-growth well on time with necessary steps & decision for steady business growth .
None existance of standard HR & marketing practice is also one of the reason of their current situation. Only finance could not run any business, it also need the positive involvement of Management in form of implementing the standard HR & marketing practices. Which they are still unable to understand & will never come out from this situation untill & unless they will not follow the standard industry norms & practices.
Posted by Ravi Shanker Srivastava

Reason could be uncontrollable Multifarious activities at a time,
Simply offering & hiring on higher packages do not guarantee instant sales,
Grass root field workings & effective consistent product promotion along with patience can only ensure long lasting survivals n
No pharma company can grow and establish over night.
The existing established companies are the live examples and proof of this conclusion.
Posted by Pramod Sharma


Surya is a classic case of mismanagement. A pharma company which finds interest in selling Crocs has finite days in the fiercely competitive world of pharma. Meaningless diversification ruin businesses - as evident from some big examples globally.
Posted by Vikas Dandekar
@Pramod Sharma:
'It indeed is the survival of the fittest'. Our consultant used to tell me almost a decade ago that one employee means 3 or 4 more dependents on him or her. A company collapsing means its a problem of survival for many in that proportion. Hence he always insisted that by helping out a company out of trouble or supporting it to do well, we not only help the management but also the staff (& the dependents) as it is extremely difficult to get a similar job for many middle and lower level employees past middle age (except higher up technocrats who can move at will). He had a great influence on me in following this philosophy.

That is in a way partly taking social responsibility to some extent (achieved by helping perpetual existence of a company), which as what you and Anup mentioned above.

Liked the way Prem puts it: 'DO NOT STRETCH YOURSELF TOO THIN'.
Posted by Dr. Ulhas Ganu  ______________________________________________________________________________________________________
@ Dr P Goel...... u r very practical. "Struggle for existence & Survival of the Fittest."is the un dented law of nature, which very well befits the situation.
Nothing can be obtained overnight else; one has to go Surya way only.. there are many who ultimately collapsed for the same reasons as assigned.
@ Mr Anup...It's a gross Social Loss.
Posted by Pramod Sharma


  1. Ankur drugs, Surya Pharma what next? Boarder do any one have any idea about ind-swift group practices?

    1. Ind-Swift is something, even I am worried about, 800 crore in consolidated debt and no cash flows to pay. The profits are shown only after they capitalize R&D, while if they dont capitalize R&D, they earn meagre profits. The interest coverage ratio is just 2 or so, forget repayment of debt.....

    2. How about Parabolic, I have heard they seem to be suffocating as well. The textile story seems to be repeating in the Indian API Industry


    3. Compared to Ind-Swift, Ind-Swift Labs is in better shape. But Ind-swift holds sizable chunk in Ind-Swift Labs. Now promoters are increasing their stake substantially in Ind-Swift through mergers and pref shares. They also are trying to enter dairy business. It seems this group is also losing their focus as they are already in education, printing business.

      Ind Swift will succeed only if they can sell some stake or sell their company to some MNC. Any comments.

    4. It seems they are on the block, but whether they will get a buyer?

  2. Why this 'news' is posted by 'Anonymous'? Real news or false? Seems false by reading.