The Sun Pharma has not given satisfactory answers to some of the concerns pertaining to corporate governance raised in a research note by Macquarie, an Australian investment bank. Experts suggest that a lot of doubts are left in the minds of investors on the role played by the institutional investors and mutual funds.
"We can't blame market regulator for everything. Now the question is how much do the investors really dig into the publicly available finances of the company. Now the questions are coming up on why the mutual funds or institutional investors not asking these questions to the company. It's for the institutional investors to ponder," Shriram Subramanian of the corporate governance firm, InGovern told DH.
He also questioned the investor silence on the Fortis issue.
On December 1, the Securities and Exchange Board of India (Sebi) initiated an inquiry into the affairs of Sun Pharma and reopened insider trading case on the basis of a whistle-blower complaint submitted in September.
The 150-page letter accused the company of committing corporate governance and tax-related lapses, besides other securities market-related violations.
Sun Pharma, its Managing Director Dilip Shanghvi, and nine others had settled the insider trading probe, paying Rs 18 lakh against the settlement charges in 2017.
However, in a detailed response filed to BSE, the drugmaker rejected all the charges. "As of now, we have not received any query related to this from SEBI," it said.
In a conference call, on Monday evening, Shanghvi said that the company had received no intimation from Sebi on the matter and announced steps to soothe investor concerns.
It all started with a research note by an investment bank last Tuesday. Macquarie, in its note on November 27 said that there were irregularities in the way Sun Pharma issued FCCBs (foreign currency convertible bonds).
Denying the allegations in the note, Shanghvi said, "The points raised in the note by the securities firm pertains to information that is sourced from the public domain and have been available to investors. Some of the issues are not related to the Sun Pharma, while some are factually incorrect while some issues are very old dating back to as old as 15 years."
However, according to Subramanian the company's response has not been adequate on the issue and, according to him, the company should come out more clear on the issue.
After the controversy broke out, the Sun Pharma stocks have taken a beating and have slid 10.1% on BSE in just two trading sessions this week. The company's stocks closed at Rs 442.8 per scrip on Tuesday.
