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Dilip Shanghvi denies insider trading allegations, says Sun Pharma follows high level of corporate governance

Updated : December 04, 2018 06:43 AM IST

Sun Pharmaceutical Industries Ltd on Monday denied any involvement into the insider trading case against the company and its promoters and reinforced that it followed higher level of corporate governance.

“One of the other issue pointed out relates to an insider trading case, which was settled with Sebi regarding the Ranbaxy acquisition. Let me clarify that Sun Pharma has not been involved in any insider trading norm violation relating to Ranbaxy deal,” Dilip Shanghvi, founder and managing director, said to CNBC-TV18.

This comes after a PTI report, quoting sources, said Securities and Exchange Board of India (Sebi) plans to reopen the investigation into the insider trading case against the company and its promoters that was settled through the consent mechanism.

On brokerage firm Macquarie’s note about corporate governance practices by the company, Shanghvi said information pertaining to this was sourced from public domain.

The note points to alleged connections with tainted entities like Ketan Parekh and Dharmesh Doshi, and the conflict of interest with regards to Sudhir Valia, a whole-time director of Sun Pharma and also the brother-in-law of promoter Dilip Shanghvi.

Shanghvi said some of the issues raised by Macquarie note is not related to Sun Pharmaceutical Industries, some are factually incorrect and others are old as 10-15 years.

“One of the points related to an audit firm Valia & Timbadia wherein it was indicated that one of the partner of this audit firm was investigated in a stock rigging case. The matter being referred here is about 20 years old and none of the partners of the audit firm or the firm itself were a party to this investigation. They have been our auditors for a long time," Shanghvi said.

Further, he said, “The audit firm audits some of our small subsidiaries. Let me also clarify that the subsidiaries that this firm audits are non-material subsidiaries for us. All such subsidiaries put together account for only 0.6 percent of our consolidated revenues for FY18. Moreover, audit is conducted in accordance with the applicable law. Given the small size of these individual subsidiaries, it's sometimes not practical to engage any large global audit firms for them.”

Clarifying why little-known London-based firm Jermyn Capital was selected to manage Sun Pharma's $275 million foreign convertible bond issue back in 2004-07, Shanghvi said the securities firm that highlighted this issue did not mention that JP Morgan was the lead manager and sole lead runner of the issue.

Jermyn's Indian arm allegedly has links with Parekh and Doshi, two traders who have come under scrutiny for the market crash of 2002.

Talking on real estate guarantees given to Suraksha Realty, he said no loans or bank guarantees were given to this company at any point of time.

(With inputs from PTI)
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