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This article is more than 2 month old.

Whistle-blower alleges related party transactions by Asian Paints' promoters; stock slumps 4%

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At 9:51 am, shares of Asian Paints were trading 3.3 percent lower at Rs 2,885 on BSE. The stock was the worst performer on Nifty50. Today's fall comes after Friday's drop as sombre commentary by brokerages had weighed on the stock. The stock has been falling for the last eight days and has slipped 13 percent during the period.

Whistle-blower alleges related party transactions by Asian Paints' promoters; stock slumps 4%
Asian Paints shares slumped over four percent on Monday after reports said that a whistle-blower has reportedly flagged off related party transactions carried out by the paint maker’s promoters that allegedly benefited them at the cost of the company’s shareholders.
The whistle-blower informed SEBI that money to buy a company called Paladin Paints and Chemicals went from Asian Paints but its promoters Ashwin Dani and son Malav now control it in their personal capacity.
SEBI has reportedly sought further details from the whistle-blower.
In a clarification to the exchanges, Asian Paints said, “The said complaint was investigated in accordance with the Company’s Whistle Blower Policy, and after undertaking a detailed review of the transactions which were mentioned therein, the said complaint was closed as the enquiry concluded that the transactions were undertaken in compliance with the law, and there was no basis for the allegations made”.
Explaining further, the company said that it had entered into a technical consultancy agreement with Jayram Nadkarni - a former employee of Asian Paints - and Paladin Paints and Chemicals during the financial year 2005–2006.
Pursuant to this agreement, an upfront consultancy charge of Rs 1.20 crore and a monthly consultancy of Rs 12 lakh for a period of 21 months amounting to Rs 2.52 crore was paid to Nadkarni for providing necessary technical consultancy, technology knowledge package and process for manufacturing of resins to the company with respect to the products governed by the agreement, Asian Paints said in the exchange filing.
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As Nadkarni was an ex-employee, he provided this technical service exclusively to the company and there was no related party relationship existing at that point in time.
During 2015–16, the company was informed of the acquisition of interest by a promoter director in Paladin Paints and Chemicals Private Ltd and since then, all the transactions (purchase and processing of goods) undertaken with the said entity have been pursuant to necessary approvals from the Audit Committee of the Board of Directors of the Company and in accordance with the applicable provisions of law, Asian Paints said.
At 9:51 am, shares of Asian Paints were trading 3.3 percent lower at Rs 2,885 on BSE. The stock was the worst performer on Nifty50.
The stock has been falling for the last eight days and has slipped 13 percent during the period.
 
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