SEBI Probe Finds Violation Of Norms By Sun Pharma

The Securities and Exchange Board of India (SEBI) has found that Sun Pharmaceuticals Ltd had violated its listing and disclosure norms by not revealing a related-party transaction with Aditya Medisales Ltd (AML), an entity owned by Sun Pharma promoters Dilip Shanghvi and Sudhir Valia.

A SEBI investigation report submitted to the SEBI board states that Sun Pharma did not categorize AML as a related party even though the ultimate beneficiary of it was promoter of Sun Pharma, which ought to have been disclosed in public under the prescribed listing regulations.

The forensic audit is learnt to have scrutinized the detailed methodology of AML's operations such as its agreement with the pharma major.

It may be recalled that in September 2019, the SEBI had ordered the audit to examine whistle-blower complaints about corporate governance lapses and alleged fund diversion.

Incidentally, AML was classified as a promoter shareholder by Sun Pharma. It owned a 1.6% stake in Sun Pharma as of December 31, 2018. Sun Pharma's domestic formulation business is entirely routed through AML, a super stockist, which was declared as a related party of the company only during FY'18.

SEBI's investigation department has recommended adjudication proceedings against Sun Pharma under Section 15 of the SEBI Act, which entails financial penalty if found guilty.

However, the SEBI probe did not confirm the alleged misappropriation of funds to the tune of Rs 42,000 crore.