Sun Pharma denies wrongdoing, says some issues are factually incorrect

Mumbai: Sun Pharmaceutical Industries Ltd founder and managing director Dilip Shanghvi on Monday denied any wrongdoing in a number of cases that came up over the past week.

“Let me reinforce that we follow high levels of corporate governance at Sun Pharma, which is expected from a global company of our size,” Shanghvi told investors in a conference call, adding “some of the issues are not related to Sun Pharma, some issues are factually incorrect and some issues are very old; dating back to as much as 10-15 years or maybe more”.

He also said that Sun Pharma, India’s largest drug maker, has not received any queries from the Securities and Exchange Board of India (Sebi) regarding a whistle-blower’s allegation that he and his brother-in-law Sudhir Valia engaged in financial irregularities with Dharmesh Doshi, a key figure from the 2001 Ketan Parekh scam, apart from an insider trading case that was settled in 2017.

Valia is also a whole-time director of Sun Pharma.

“We have not received any queries from Sebi, and are unable to comment on this point now,” Shanghvi said, adding he expects the markets regulator to act “within a reasonable amount of time”.

On the reopening of the insider trading case during the acquisition of Ranbaxy Laboratories Ltd, Shanghvi said Sun Pharma “has not been involved in any insider trading norm violation in this deal”.

The whistle-blower has alleged that Shanghvi, Doshi and Valia made unlawful gains of ₹ 8,000 crore through insider trading. The probe was settled in 2017, when Sun Pharma, Shanghvi, and nine others paid ₹ 18 lakh to the regulator. According to norms, Sebi can reopen a case “if the terms of settlement have been violated”.

Addressing other issues in the Macquarie’s note on Sun Pharma circulated on 27 November, Shanghvi said none of the partners of auditor Valia and Timbadia were party to a probe regarding a stock-rigging case, which is about 20 years old.

“They have been our auditors for a long time, and have audited some non-material subsidiaries, which together make up only 0.6% of consolidated revenue for FY18”, Shanghvi said, adding the firm is “open to ideas which will address investor concerns related to ensuring confidence in the numbers that we share with you, which might include introduction of new audit firms in these subsidiaries”.

On the hiring of little-known London-based Jermyn Capital LLC to co-manage the issue of $275 million of foreign currency convertible bonds (FCCBs) back in 2004-07, Shanghvi said, “The fact is that the securities firm which highlighted this issue last week (Macquarie) has not mentioned that JP Morgan Chase was the lead manager and sole bookrunner for the issue. Jermyn Capital was only co-manager”.