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Sun Pharma stock tumbles to six-year low on report of fresh allegations by whistleblower

The whistleblower complaint alleges that an Indian pharmaceutical manufacturer Aditya Medisales Ltd had transactions with Suraksha Realty, controlled by Sun Pharma's co-promoter, Sudhir Valia.

twitter-logo Reuters        Last Updated: January 20, 2019  | 19:05 IST
Sun Pharma stock tumbles to six-year low on report of fresh allegations by whistleblower

Shares of Sun Pharmaceutical Industries slumped over 13 percent on Friday to near six-year low, after a media report of a complaint by a whistleblower raised fresh concerns on the drugmaker's corporate governance. The complaint, sent to the capital market regulator Securities and Exchange Board of India (SEBI), is the second in over a month, according to the report by Moneylife magazine.

The whistleblower complaint alleges that an Indian pharmaceutical manufacturer Aditya Medisales Ltd had transactions with Suraksha Realty, controlled by Sun Pharma's co-promoter, Sudhir Valia, the report stated.

The transactions took place between 2014 and 2017, and were worth over Rs 5,800 crore ($814.65 million), it added.

A whistleblower had approached SEBI late last year with a document alleging various irregularities by Sun Pharma, its promoter Dilip Shanghvi and others.

Sun Pharma in a clarification to the BSE said,"The said whistleblower documents and other confidential emails are being offered for inspection to institutional investors by one media house as per the above report, which again we are not privy to.

In these circumstances, there is a great asymmetry in the information circulating between analysts, investors and media leading to intense speculation.

The availability of information contained in the whistleblower documents to a set of selective investors does put other investors including retail investors in a disadvantageous position. We are concerned that certain entities/individuals are adopting unfair trade practices prejudicial to the interest of shareholders and other stakeholders.

It is evident from the fact that shareholders value has been drastically eroded within a short span of time due to unsubstantiated complaint/allegation against the company and mala fide campaign launched by certain media houses."

Shares of the country's largest drugmaker by market value recorded their biggest intra-day percentage drop since May 29, 2017.

Over 31.4 million shares changed hands as of 0453 GMT, around 2.7 times Sun's 30-day trading volume average of 11.7 million shares.

Earlier this month, Sun Pharma had recalled muscle relaxtant vecuronium bromide for injection due to the presence of glass.

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