Sebi said it had received two whistle blower complaints, wherein allegations were made against
and its wholly owned subsidiary, Sun Pharmaceutical Laboratories Ltd (SPLL), alleging that SPIL and SPLL had been diverting funds through Aditya Medisales, its sole distributor in India.
Further, it was alleged that transactions with Aditya Medisales were ongoing for several years. However, Aditya Medisales was disclosed as a related party of Sun only in FY18, the regulator said.
Subsequently, a forensic audit was conducted in the matter followed by investigation. Sebi observed during the investigation that Aditya Medisales was a related party of Sun even before the scheme of amalgamation. However, the relevant compliance pertaining to related parties, as required under Sebi rules were not made by Sun, the regulator said.
“Since a company acts through its board of directors and the directors are responsible for all the acts of omission and commission by the company. In view of the same, Shri Dilip Shanghvi, being Managing director of SPIL, was in-charge of its operations and decision making process, therefore, it was observed that the Applicant (Shanghvi) had violated the provisions of Sebi Regulations,” said Sebi.
Two other directors of Sun– Sailesh T Desai and Kalyanasundaram Subramanian– too have paid a total of Rs 74.38 lakh as settlement charges. The company’s chief financial officer Uday Baldota, its compliance officers Sunil Ajmera and Ashok Bhuta have paid a total of Rs 61.84 lakh as settlement charges.
Analysts expect the stock to see a relief rally on Friday as investors will cheer the end of the regulatory uncertainty. The closure of the whistle blower case coming on close heels of a strong third quarter performance.
Investors will, however, be wary that this is the second time the Sun Pharma’s promoters are involved in a settlement with Sebi – an aspect that is going to weigh on the company’s ESG (Environmental, Social and Governance) compliance reputation, said analysts.