By Ari Altstedter
Sun Pharmaceutical Industries Ltd. plunged to its lowest point in almost six years after a media report that a new whistle-blower complaint alleging corporate governance lapses has been sent to India’s market regulator.
Shares of the nation’s largest drugmaker slipped 8.4 percent to close at 390.75 rupees a share — the lowest level since March 2013. Sun Pharma was the day’s worst performer on S&P BSE Sensex, data compiled by Bloomberg shows. The company said in a filing it wasn’t privy to the complaint.
A 172-page complaint sent to the Securities and Exchange Board of India alleges one of the drugmaker’s distributors, which has been declared as a related party, did 58 billion rupees worth of transactions with a realty firm that is controlled by a director on Sun Pharma’s board, according to a Moneylife report.
Moneylife’s offer to show these whistle-blower documents only “to a set of selective investors does put other investors including retail investors in a disadvantageous position,” Sun Pharma said in a letter to the market regulator Friday. “There is a great asymmetry in the information circulating between analysts, investors and media leading to intense speculation.”
Investor Scrutiny
The latest news report about a fresh whistle-blower complaint has increased investor scrutiny on the drugmaker that’s controlled by its billionaire founder and largest shareholder, Dilip Shanghvi. The complaints around corporate governance lapses threaten to overshadow the company’s progress winning new product approvals in the U.S.
The drugmaker “has been facing issues on corporate governance since the last few months” and had briefed foreign institutional investors in December on this issue, said Sameer Kalra, president at Target Investing in Mumbai.
Sun Pharma requested the market regulator to examine “the role of some media houses and other stakeholders” in a “mala fide campaign” that has resulted in the stock’s plunge.
SEBI spokesman N. Hariharan didn’t respond to calls and text messages by Bloomberg seeking comment.
A November report by the Press Trust of India said SEBI is likely to reopen an insider trading case against Sun Pharma to probe alleged lapses by some of its promoters and other entities in raising funds oversees. This investigation was prompted by an earlier whistle-blower complaint, the PTI report had said.
The article was published in Bloomberg Quint.
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