Some shareholders present at the AGM and contacted by The Financial Express

observed that overseas investments of Rs 330 crore had proved ``unproductive.'' A shareholder Akshit who came from Mumbai to attend the meeting observed that Ranbaxy had invested about Rs 330 crore in subsidiaries but the subsidiaries operating in US, China, Russia and other CIS countries had not brought the desired results much to the discomfiture of the shareholders.

Another shareholder Mukesh from Chandigarh wondered whether the company would ``write off'' the investments on the CIS operations in view of losses reported. Another shareholder was apprehensive about the Chinese market as not many products of Ranbaxy had qualified in China.

Reacting to shareholders apprehensions, Singh said that ``returns could not be ensured in 12-18 months of operations and eventhe MNCs operating in India were of the view that returns could start pouring only after 7-8 years.'' One has to ``create brand equity and stabilise'' to reach break-even point and then to gradually make profits.

He asked shareholders to give the company at least five year's time and if the subsidiaries fail to make profits even after that then there was certainly something amiss.

``Overseas operations and subsidiaries were there to serve long-term interests of the company'' and it was not the perspective of the company to ``live for year to year'' basis, he said. The ``perspective of Ranbaxy was sustained growth,'' he observed. He informed that many subsidiaries had reached the break-even point and by year 2000 others would reach this level and then these may start making profits. About US operations, he said that by year 2003, the size of operations would be between $100 million and $120 million. More products were being registered.

Singh said that he was ``quite bullish'' about Chinese operations,but agreed that only a limited range of products had been introduced in China.

About Russian market, he observed that ``there was no light at the end of the day even today.'' He said that company would, however, not withdraw from Russia. The idea was neither to withdraw from Russia nor to go in for reckless expansion but to ``keep Ranbaxy's presence in Russia.'' He hoped that in the long term, when the whole climate stabilises, Russia would be a good market and then the company could attain ``full speed'' in operations.

International operations of Ranbaxy accounted for about 50 per cent of total business of the company. About the performance of subsidiaries and joint ventures, Singh said that Ranbaxy Pharmaceuticals Inc had registered a turnover of $15.4 million in the first year of sales inclusive of sales of joint venture Ranbaxy Schein Pharmaceuticals Inc. Similarly, Ohm Laboratories Inc recorded sales of $19.5 million registering a growth of 25 per cent over previous year. Ranbaxy Nigeria Limited wasperforming well despite turbulent market conditions. It recorded sales of Naira 356 million registering a growth in sales of 21 per cent over previous year and Ranbaxy (China) recorded sales of RMB 94.85 million registering a growth of 12.4 per cent over last year and was able to achieve break-even while several other subsidiaries were trying to consolidate their positions overseas.

The Ranbaxy chief said that sales from India and Middle East during nine months ended December 1998 increased by Rs 769 million resulting in a growth of 14.8 per cent. The pharma division achieved a turnover of Rs 21,837 million. The Europe, CIS and Africa region recorded a sales worth $37.78 million which combined with sales through subsidiary companies to bring the total to $51.45 million. He agreed that CIS crisis led to strict control on ex-India exports to Russia and Ukraine in line and hence sales declined by 3 per cent. He claimed that Asia Pacific and Latin America region was marked by a focus on profitability during theyear, while Ranbaxy was strengthening the marketing and sales infrastructure in US and expanding network to support the pipeline of products.

Allaying fears of investors on Rs 330 crore in subsidiaries, Singh observed that ``returns were not very poor'' and once brand equity was created and operations stabilised, in 2-3 years most of these subsidiaries would achieve a break-even point and then register profits.