Kolkata: In a petition filed in the Bombay high court, the management of Zandu Pharmaceutical Works Ltd has levelled charges of insider trading against Devkumar Vaidya, the founder’s descendent who, along with his sister, sold a 24% stake to Emami Ltd towards the end of May and kicked off a takeover battle.
When contacted, Vaidya confirmed that such an allegation had indeed been made in the petition, but refused to comment on it because the matter is in court. “My lawyers are going to respond to the allegation. Let the court decide,” he said.
Vaidya has time till 14 August to respond to the charge. The next hearing on the petition will take place at the Company Law Board, or CLB, on 20 August. Zandu had moved the CLB earlier, but the board refused to hear the dispute. The Bombay high court on Thursday asked Zandu to move the CLB again.
Asked about the allegation, Zandu’s managing director Girish Parikh refused to comment. Emami’s director Harsh V. Agarwal said he wasn’t aware of the Mumbai-based herbal health care firm having made any such allegations.
Though details weren’t revealed, a lawyer familiar with the petition said on condition of anonymity that Zandu had dealt with the insider trading allegation at length.
After Vaidya and his sister sold their 24% stake in Zandu, the market price of the company’s shares shot up substantially. Whereas the Vaidyas sold their 24% stake for Rs6,900 a share and Emami announced an open offer for 20% more at Rs7,315 apiece, the market price of Zandu’s shares had zoomed past Rs20,000 after the stake sale was announced. It closed at Rs17,353 on the National Stock Exhange on Friday. Both Emami and Zandu had said the stock price shot up because of speculators’ interest.
Besides insider trading, Zandu’s management also alleged that it had the right of first refusal on the shares sold by the Vaidyas—descendants of the founder of the company. But Zandu’s chairman Y.P. Trivedi had told Mint earlier that he wasn’t aware of any formal agreement between the Vaidyas and Parikhs on right of first refusal. Because of the ongoing litigation, the Securities and Exchange Board of India—the securities market regulator—hasn’t cleared Emami’s open offer for 20% more of Zandu’s shares. The offer was supposed to open on 24 July.