New Delhi: Sun Pharmaceutical Industries today informed the stock exchanges that a wholly owned subsidiary would now handle the distribution of its domestic formulations. This transfer of business from current distributor Aditya Medisales, a related party, would take place by June, a company notice to the BSE said. Aditya Medisales was at the heart of the controversy that engulfed Sun Pharma last week and eroded its share price.
The steps seemed to assuage investors rattled by concerns over corporate governance at the company, and the share price of Sun Pharma was up almost 5% at ₹417 on the BSE in the session under way today. It touched a high of ₹421.15 before that.
A whistleblower complaint had alleged that payments made by Sun Pharma to Aditya Medisales had been routed to Suraksha Realty, a company owned by Sudhir Valia, a Sun Pharma promoter. The complainant alleged that the transactions took place between 2014 and 2017 and were worth over ₹5,800 crore. The allegations were first reported by journalist Sucheta Dalal’s 'Moneylife' magazine, a platform that professes to fight for rights of investors and the common man.
Sun Pharma has continued to deny that this was the case. Sun Pharma, in the latest BSE notice, also denied that it had extended any loans or stood as guarantor for Suraksha Realty.
Extending its attempt to come out clean, the company said it would be unwinding a ₹2,238 crore loan given to Atlas Global Trading, an unrelated party. Atlas will assign its rights and obligations to a wholly owned subsidiary of Sun Pharma. The transaction will be completed this quarter itself.
The transaction with Atlas dates back to September 2014 when Sun Pharma’s Halol manufacturing facility in Gujarat was hit by the US FDA’s concerns related to ‘good manufacturing practices’ at the plant. As the US FDA issues hit the Halol plant, Sun Pharma wasn’t able to adhere to its supply commitments with Atlas. Sun Pharma, in 2017-18, funded Atlas towards non-fulfillment of its supply obligations till the time such obligations were fulfilled as per the agreement.