Sun’s corporate governance in question, stock in free fall

By PharmaCompass

2018-12-06

Impressions: 119 Article

Indian drug major Sun Pharmaceutical Industries has been in news over corporate governance issues. The company has seen its investors concerned, with the company stock touching new lows. On Monday, the stock ended 7.55 percent lower.

Sun’s stock have been falling since November 27 when a WhatsApp forward leaked details of brokerage Macquarie’s report containing allegations of corporate governance improprieties.

A PTI report said that India’s financial markets regulator — the Securities and Exchange Board of India (SEBI) — is likely to reopen its probe into an insider trading case against Sun Pharma and alleged lapses by some of its promoters and other entities in raising funds overseas. A whistleblower, according to the report, approached SEBI with a document alleging irregularities at the company.

However, Sun Pharma’s managing director Dilip Shanghvi said the company had received no intimation from SEBI on the matter. He also announced steps to soothe investor concerns in a conference call.

Sun Pharma said it was open to engaging new audit firms for subsidiaries and discontinuing domestic sales through a related party (that had been questioned), in a bid to allay investor concerns. The firm said it was open to making changes wherever matters were not in shareholders’ interest.

Shanghvi also said the company will work towards re-establishing credibility and corporate governance by reviewing some past decisions, such as a US$ 250 million loan to employees and others and a possible buyout of a domestic company classified as a related party.

Shanghvi said his firm is committed to the highest level of corporate governance. “The underlying theme of the note is to project serious corporate governance issues at Sun Pharma,” he said. “We follow a high level of corporate governance which is expected from a global company of our size.”

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