Jagan effect has caused a major top brass reshuffle at Aurobindo Pharma Limited with the pharma major's alleged links with tainted Kadapa MP and YSRCP president YS Jagan Mohan Reddy coming under severe scrutiny by the Central Bureau of Investigation (CBI). The company has announced restructuring of its top brass on Wednesday and also reported a 13.6 per cent drop in its net profits for the quarter ending March 31, 2012.

The Hyderabad-based pharmaceutical giant, Aurobindo Pharma, informed BSE that it had redesignated the company’s managing director K Nithyananda Reddy as vice-chairman and appointed him as a whole-time director of the firm. Industry observers said the restructuring was done in view of the developments in the Jagan case to ensure that the company's operations are not affected at any stage through the investigations. It is well known that currently Jagan Mohan Reddy is lodged in Chanchalguda jail facing charges of disproportionate assets and Aurobindo Pharma happens to be one of the investors in Jagan's companies.

The CBI had raided the various premises of the company on August 19 and 20, 2011, two days after the FIR was registered in the Jagan case. Reddy was named in a CBI chargesheet filed in the Jagan assets case. The investigating agency had disclosed that Aurobindo through the relatives of its managing director, Nithyananda Reddy, had invested Rs 3 crore in Jagan-owned Jagathi Publications as a quid pro quo arrangement. In return, the government had allotted Aurobindo along with another pharma major 75 acres of land at a subsidized rate at the pharma Special Economic Zone at Jadcherla in Mahabubnagar district in 2006.

Aurobindo had made similar investments in Janani Infrastructure as well, the CBI had noted. Reddy will be relinquishing his current responsibilities on June 1 to take on his new position. P V Ramaprasad Reddy who along with Nithyananda Reddy had founded the Aurobindo Group of Companies in 1986, is also set to step down from his position as executive chairman of the company. He will now continue as a whole-time director of the board. While company sources refuted reports about the sudden restructuring being rooted in the Jagan case, industry observers claimed otherwise. They said the move was primarily aimed at taking the spotlight off the biggies of Aurobindo who were currently under the CBI scanner. The vice-chairman’s designation is viewed as not so critical a post as that of an MD in the company.

The board of directors of Aurobindo have now appointed N Govindarajan, currently the CEO (API & CRAMS) as director and managing director of the company. His appointment, effective June 1, is subject to approval of shareholders at the company’s ensuing annual general meeting, the board informed BSE. The company also re-designated K Ragunathan (now an independent director) as non-executive chairman of the board with effect from June 1. Ravindra Y Shenoy’s fresh appointment as director and joint managing director of the pharma major, the board stated, would be confirmed once approved by the company’s shareholders.