Shares of Sun Pharmaceutical Industries plunged 8.52% Friday to their lowest level in six years, wiping out 8,735 crores from its stock market valuation following reports of a new property launcher claim. alert against the country's largest drug maker.
The stock, which plunged more than 12% in daily trading under significant selling pressure, ended the day at Rs 390.75 on the BSE, with the firm's market capitalization setting in. 93,751.44 crores. The stock has corrected by 25% since the announcement of a whistleblower complaint to the Securities and Exchange Board of India (Sebi), announced in November. In the last year, it has dropped 32%.
Sun Pharma on Friday asked the market regulator to consider the role of some news outlets regarding the whistleblower's allegations. The 172-page whistleblower complaint alleges that between 2014 and 2017, Aditya Medisales (AML) performed nearly 5,800 crore transactions with Suraksha Realty, which is controlled by Sudhir Valia, chief executive and close relative of Sun's sponsor. Pharma, Dilip Shanghvi. , according to a report from Moneylife.
Curiously, the title did not react immediately after the publication of the article Tuesday on the Moneylife website. The title was slightly up Wednesday with gains of 0.3%. Thursday, it ended on a fall of 5.8%. However, on Friday, the fall was very severe, after the publication allowed institutional investors to view the whistleblower's complaint. According to market sources, many institutional investors have seen the copy of the complaint.
Foreign institutional investors (FII) have sold stocks in recent months. The IFI's share had fallen to 16.88% to 14.88% for the December 2018 quarter, compared to the previous quarter. Value Research data showed that the average exposure of mutual funds to the company had also gone from close to 2% to 1.6% in the last two months.
Market sources claimed that the IFIs had sold off certain holdings during this week, especially on Friday, which could have triggered a stock price correction on Friday. The same, however, could not be verified independently.
In a letter to Sebi, which was also shared with the BSE, Sun Pharma said it had been informed of the whistleblowers' complaint by the media. "Documents on whistleblowers and other confidential e-mails are subject to the scrutiny of institutional investors by a news agency in accordance with the above report, of which we are not aware either," read the signed letter from Sunil Ajmera, Secretary General of Sun Pharma. .
"In these circumstances, there is a great deal of asymmetry in the information circulating between analysts, investors and the media, which leads to intense speculation. The availability of information contained in the documents on whistleblowers for a set of selective investors effectively puts other investors, including individual investors, at a disadvantage, "he said.
Ajmera added, "We are concerned that some entities / people are engaging in unfair business practices that are detrimental to the interests of shareholders and other stakeholders." It is clear that shareholder value has been significantly eroded in a short time. asking your office (Sebi's President, Ajay Tyagi) to consider the issue in its entirety, as well as the role of certain media and other stakeholders. "
At the same time, answering Business Standard questions, a spokesman for Sun Pharma said, "We have received two requests from Sebi to which the company responded. We are not able to say if the queries are related to the complaint of a whistleblower. "
Voting consulting firms such as InGovern have argued that the overdevelopment of corporate governance will persist for some time on Sun Pharma's stock. "The company has treated the case in an amateur manner and has not fully responded to investor concerns," said Shriram Subramanian, chief executive of InGovern. According to fund managers, the charges have reduced the gloss of the title, considered a flag bearer of the Indian pharmaceutical industry. "These allegations could undermine investor sentiment for the entire pharmaceutical industry, as they may fear similar reconciliations with their related entities in other pharmaceutical companies," said a fund manager. , asking to remain anonymous.
In response to Sun Pharma's allegations regarding the selective disclosure of available documents, Moneylife stated on its website: "If Sun Pharma believes that these whistleblower documents must be entirely in the public space, Sebi should be the only one in the world. organ that will make them public. He added that for each article written on this issue, he had asked Sun Pharma to share his comments, in line with journalistic standards.