INSUBCONTINENT EXCLUSIVE:
Mumbai: India's largest drug maker Sun Pharma on Tuesday said that market regulator SEBI has sought its answers on two queries - on the
company's 2004 fund raising, and its dealings with domestic subsidiary Aditya Medisales (AML).
A whistle-blower complaint has alleged that
the company reportedly dealt with banned traders such as Dharmesh Doshi and Ketan Parekh, and that Sun Pharma lent money to AML, which is a
Sun said it has not seen the whistleblower letter yet.
The FCCB fund-raising transactions of Sun Pharma go back to 2004 when the company,
besides JP Morgan, had hired Jeremy Capital as its second lead manager to raise the funds
In a research note, a Macquiarie analyst had alleged that Jeremy Capital had links with banned traders Ketan Parekh and Dharmesh Doshi
Sun Pharma has denied all these charges.
On Tuesday, Sun Pharma promoter Dilip Shanghvi, while giving the update on investor queries
regarding the businesses of AML and Atlas, said he hoped these issues were now on the backburner
He said that Sun Pharma never favoured AML over minority shareholders
AML's net margin was 1 per cent and its gains were the dividends it received from being Sun Pharma's shareholder.
Shanghvi also said that
since AML was running on thin margins, Sun from time to time lent to AML
In a January interview to ET, Sun Pharma's whole time director Sudhir Valia had said, however, that the drug maker had never lent to
AML.
Earlier this month, Sun Pharma restructured some of its business operations to arrest its falling share price and allay investor
concerns over corporate governance issues at the company
Among them were unwinding the company's domestic formulation business involving AML and squaring off a $300-million loan given to Atlas
Trading.
Shanghvi said the company had received queries from investors on whether it funded Atlas, and the company did so on two occasions
with a view to conserve cash to retain the flexibility of undertaking mergers and acquisitions in the specialty space.
It first gave a
temporary loan in FY15 to enable Atlas to complete a transaction it had entered into with Sun Pharma as Atlas needed some time to raise $400
million from the debt market
This temporary loan was repaid in FY16 after Atlas raised funds.
In FY18, Sun again funded Atlas with a loan of $300 million, and this was
given to comply with supply-linked obligations, he said
Sun was unable to fulfil the supply obligations to Atlas due to GMP issues at Halol
Recently, we announced the unwinding of the Atlas transactions, (and) this will result into the transfer of the supply contract to the
company's wholly owned subsidiaries and Atlas moving out of the transactions
Hence, $300 million will get squared off regarding the unfulfilled supply arrangements,” Shanghvi said.
