The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
Sun Pharmaceutical Industries Ltd’s fourth-quarter profit halved from a year ago as the fallout from a corporate governance scandal caused it to take a 10.85 billion-rupee charge ($155.7 million) and led to the brother-in-law of billionaire founder Dilip Shanghvi moving to a non-executive role.
Shares rose by as much as 2 percent on Wednesday morning trading as investors cheered signs that the company is cleaning house and moving past the scandal.
Net income was 6.36 billion rupees for the quarter ended on March 31, compared to 13.4 billion from a year ago, according to a filing. The average analyst estimate was for a 9.5 billion-rupee profit. Revenue for the quarter was 71.64 billion rupees, compared with an average analyst estimate of 75.4 billion rupees.
Sun Pharma is making its most extensive damage control moves since media reports emerged earlier this year on whistle-blower complaints alleging various corporate governance lapses. The one-time charge that halved its quarterly profit stems from its attempt to unwind a relationship with a firm owned by Shanghvi, a connection that was reportedly called into question by whistle blowers.
Although Sun has denied most of the allegations, it also announced that Sudhir Valia, a whole-time director and relative of Shanghvi that was a central figure in the whistle blower complaints, will become a non-executive director instead. The complaints had reportedly alleged that the Shanghvi-owned distribution business had made improper loans to firms controlled by Valia. The company denied those loans were made. Without the one-time charge, Sun Pharma said it would have seen sales of 81.29 billion rupees, a 21 percent increase over the same period last year.
The company’s margins were hit by higher spending because of its push into patented medicines.