Cipla promoters' fourth scenario: The Dabur way

livemint.com:

₹1 trillion-plus Cipla family stake sale saga will unfold. In the first scenario, interested bidders – ranging from domestic pharmaceuticals major Torrent, which in turn is in talks with CVC Capital Partners and Brookfield’s to raise the required capital, to private equity funds like Blackstone, KKR and Advent – sweeten their current offer and acquire the company. In the second scenario, Cipla patriarch Yusuf K Hamied wins over family groups who are currently against cashing out and the sale goes through.

The third possibility is that neither of these scenarios plays out and Cipla continues as it currently is – a professionally run company with strong family-owner oversight and control. But with both Yusuf and his brother MK Hamied in their eighties, and with other family shareholders already sharply divided over the sale, a clear regime change looks unlikely and the dispute is more likely to carry over into the third generation of Hamieds. All three bode ill for any long term continuation of Cipla’s unique legacy as a producer of affordable lifesaving drugs for the world’s poor.

The Cipla family's efforts to sell its stake and unlock value for themselves and their shareholders is understandable. Patriarch Yusuf Hamied is keen to leverage the proceeds for charitable and philanthropic purposes. In February 2022 the promoter group had sold 2.5% stake, and in a regulatory filing with stock exchanges the family clarified that the sale was for “personal and philanthropic purposes".

This impulse to do good is engrained in the company’s DNA. Founded in 1935 by YK and MK Hamied’s father Khwaja Abdul Hamied, a chemist trained in Germany, Cipla was started as a ‘swadeshi’ venture influenced by Mahatma Gandhi. It was the first