Shares of UPL plunged over 15 percent on Thursday after reports surfaced that a whistleblower has accused the company's promoters of siphoning funds. The stock tanked as much as 15.48 percent to Rs 416.05 apiece on the BSE.
The whistleblower alleged that UPL entered into rent deals with the shell company owned by its employees and paid crores in rent for properties held by the latter, which was earlier owned by UPL chief Jaidev Shroff himself, newspaper The Economic Times reported.
According to the details submitted by the whistleblower, there seem to be certain corporate governance issues with regards to transactions done by the promoters of UPL.
However, speaking to CNBC-TV18, Shroff refuted the allegations calling it "completely malicious”.
“This complaint was made in 2016-17 from a board member, it was made by my estranged wife, about the house that I live in and this is rented on an arm's length basis to UPL for my residence,” said Shroff.
He said that the auditors had reviewed the transactions between companies that had rented the residence. “The rental agreement is cancelled and the house is no more rented to UPL,” said Shroff.
“Sadafuli was bought for me to stay in but I do not have any shareholding in that company. It’s completely an arm’s length. It’s a market related rental agreement. Sadafuli was created to buy and invest in properties. It is owned by independent shareholders,” he said.
“We believe there has been a systematic malicious intent to try to malign the family and the company. We believe our business is very strong. UPL has a great business opportunity to continue to grow and we will not be distracted by all these malicious allegations. Obviously, this is a 2016-17 matter and it has been dealt with appropriately,” said Shroff.
At 12:20 pm, the shares of UPL traded 12.70 percent lower at Rs 429.80 apiece on the BSE as compared to a 0.74 percent loss in the benchmark Sensex.