The Dani family, the promoter of Asian Paints, has come under fire from InGovern, as the proxy advisory firm has pointed out that several related party transactions between Asian Paints and Paladin Paints & Chemicals, a private company owned by the Danis, are not disclosed adequately.
Asian Paints has said it will be suitably responding to InGovern's report, which has certain factually incorrect information. The paintmaker has said that all transactions involving related parties are undertaken in strict compliance with law.
InGovern has highlighted the likely conflict of interest involving entities controlled by the Danis which also supply raw material to the paint manufacturer.
Shriram Subramaniam, Founder and Managing Director of InGovern, said: “We are just saying that the related party transactions are not explained in detail by the company. The company has come out and said that the Paladin does only transactions of Rs 1.2 crore or Rs 2 crore, but the fact that the company has to now put out outside of what they have already put in annual report means that Asian Paints is lacking in disclosure."
"More than Rs 500 crore worth of goods are procured from promoter-related entities. Shareholders do not know which these entities are and what the logic is, and why Asian Paints is procuring almost six percent of the raw material that it procures from promoter-owned entities. That is what we are questioning," Subramaniam added.
“Rs 1.3 crore is with Paladin. The overall related party transactions is Rs 500 crore... At the end of the day, we hold Asian Paints to higher standards, the fact that most other companies disclose line by line with which related party the value of the contract and the logic... that most other companies are doing. Why is Asian Paints not doing it? We are just saying that this conflict of interest is there," he said.
"Most other companies disclose it value-wise across each bill. look at all the Nifty50 companies, a majority of companies do it. So from that perspective, we hold Asian Paints to higher standards," he said.
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