Dilip Shanghvi of Sun Pharma To Meet SEBI Chairman; Assert that Whistleblower Info Is Old
Dilip Shanghvi, chairman and managing director (CMD) of Sun Pharmaceuticals is supposed to meet Securities and Exchange Board of India (SEBI) chairman Ajay Tyagi this afternoon. Moneylife learns that Mr Shangvi is likely to assert that all the information contained in the two complaints filed by a whistleblower submitted to SEBI, are old information that is pertaining to a period of 10-15 years ago, and have no relevance today. We gather that the Sun Pharma CMD is likely to point out that the complaints have been instigated by business rivals.
 
Separately, Sun Pharma has said that SEBI has indeed asked the company replied to two queries asked by the market regulator, but the company is not in a position to comment whether these queries were related to the whistleblower complaints.
 
Moneylife alone has the whistleblower complaints and we can affirm that information pertains to the past few years and not to 10-15 years ago. In this article, for instance, we have pointed out that in just over three years, between 2014 and 2017, Aditya Medisales Ltd (AML) has had over Rs5,800 crore of transactions with Suraksha Realty, controlled by Sun Pharma’s co-promoter, Sudhir Valia. (Read: Sun Whistleblower Complaint to SEBl – 2: Huge Transactions between Aditya Medisales and Private Companies of Sun’s Promoters)
 
This information pertains to only one group company, viz., Suraksha Realty. According to the whistleblower, Sun Pharma’s promoter Dilip Shanghvi and his brother-in-law Sudhir Valia control over 250 companies and hundreds of bank accounts. None of this information is old. It is all current information.
 
The whistleblower has attached 50 pages of statements of Suraksha Realty’s ICICI Bank account and 20 pages of its Yes Bank account covering 2014-17, to prove his point.
 
It may be recalled that in the conference call held in early December also, Sun Pharma had tried to characterise the swirling questions about its governance as more than a decade old.
 
The fact is that the relationship with AML is current. AML gets all its money from distributing the products of the publicly-listed Sun Pharma. Sun Pharma’s promoters have always controlled AML; but chose to declare it as a related party only in 2018.
 
In effect, a huge amount of money generated from the publicly-listed Sun Pharma is going in and out of the personal unlisted companies of Sun Pharma’s promoters, through a distributor controlled by them privately.
 
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COMMENTS

Ramesh Poapt

3 months ago

Will sun set?!?!

IL&FS time bomb ticks
With rating agency CRISIL cutting the creditworthiness of two special purpose vehicles (SPV) of IL&FS citing "heightened risk" of defaults and as the company management takes a new stance on repayments, the multiplicity of a dubious web of SPVs within the entity has once again spooked the markets.
 
As such the IL&FS secret society remains a ticking time bomb. A concerned government is trying its best to remain on top of things and is in constant touch with the Uday Kotak-led team. 
 
CRISIL has downgraded its rating on the non-convertible debentures (NCDs) of Jharkhand Road Projects Implementation Company Ltd (JRPICL) to BB(SO) from 'CRISIL AA(SO), a drop of about nine notches. Ditto, it has has downgraded its rating on such instruments sold by North Karnataka Expressway Ltd (NKEL). 
 
The Group has a catalogue of as many as 162 SPVs within the country and contagion is likely to spread rapidly as the scope and size of rating watch is enlarged. What is even more serious is that there is another lot of steroid-pumped foreign companies for which the Corporate Identification Number (CIN) cannot be found just as the level of evasion on the part of the erstwhile management. As many as 186 such overseas firms have virtually no records whatsoever. 
 
The phalanx of SPVs within the Group and the impending ratings downgrade has sent shockwaves in the markets, since banks, financial institutions, NBFCs, realty and other road concessionaire companies could be imperilled with the widening of this exercise. 
 
IL&FS' business model was predicated on creating SPVs to conduct business and the majority of such entities are in a financial disarray. In Maharashtra alone, IL&FS Group has 88 such SPVs like Khambhat Port Ltd, Charminar Robopark Ltd, East Hyderabad Expressway, etc.
 
The maze of such SPVs which the new Uday Kotak-led board is still probing and understanding could well be the entity's bugbear. 
 
Domestically, there were these SPVS while overseas there were subsidiaries -- direct and indirect across the world. On both fronts, the new management is trying to get a handle on things. In Chhattisgarh, there is one SPV -- Chhattisgarh Highway Development Co, in Delhi, there are 20 including the Noida Toll Brdige Company, in Tamil Nadu, there are 11, in Jharkhand, there are six, and Bihar has two.
 
India is well represented. So in Gujarat, there are an additional seven, West Bengal has five, Karnataka two, Odisha one, Rajasthan three, Telangana five, Haryana five, Andhra two, Uttar Pradesh one, Assam two, Tripura one, Nagaland one and Uttarakhand one. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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COMMENTS

Ramesh Poapt

3 months ago

Can ML find MF investments in the above-mentioned security please?

REPLY

Pratibha kamath

In Reply to Ramesh Poapt 3 months ago

Please read latest article for answer - https://www.moneylife.in/article/ilfs-default-new-problems-for-debt-schemes/56193.html

Should You Buy a Home Now?
This is, without doubt, a very favourable market for homebuyers looking to purchase properties for their own use. One of the obvious reasons is the abundance of options in all categories of housing to pick from. Also, property rates have reduced considerably across cities. Nevertheless, many fence-sitting buyers still hope for further corrections.
 
There may still be scope for some marginal rate corrections in certain depressed markets - but as we often say in the industry, timing the market is a game only investors should play. There are no guarantees for when, where and even if, corrections will occur. 
 
 Certainly, a whole country's real estate market does not witness synchronized corrections like it does on the stock market, where everyone is affected simultaneously and to the same extent. For genuine homebuyers who recognize a good thing when they see it and can call it good enough, it has certainly never been a better time.
 
The government has also provided several incentives for first-time homebuyers, especially in the budget homes category, and developers are rolling out year-round attractions in their keenness to close transactions. Moreover, the plentiful supply of ready-to-move-in properties also benefits homebuyers - the instincts for instant gratification and risk aversion can be satisfied simultaneously.
 
Guidelines for End-users
 
The fact that the current market distinctly favours buyers should not result in rushed purchase decisions. Rather, buyers should:
 
  • Identify the best options in the multitude available on the market
  • Investigate their final shortlisted options for complete legal sanctity
  • Exercise caution with under-construction projects and look for healthy, ongoing construction activity with considerable on-ground completion progress
  • Consider only projects with Real Estate Regulatory Authority (RERA) registration in place
 
The RTM Advantage  - The current preference for ready-to-move (RTM) options is understandable. Despite many customer-favouring court rulings on this front, the unwholesome aura of delayed, stalled and even shelved projects which had beset many cities markets continues. In fact, the recent and ongoing non-banking finance companies (NBFC) crisis has made the situation even worse.  
 
Another pain-point for under-construction properties has been GST. Ready-to-move properties were cumulatively assumed to be and marketed as exempt from GST. However, a recent clarification confirmed that only ready projects with completion certificates in place enjoy this benefit.
 
 In other words, even for RTM properties, the availability of this vital document is something that buyers need to investigate diligently.
 
Guidelines for Investors
 
 Not all buyers are looking to purchase a home for their own use. The market still holds some scope for investors too. However, the dynamics have changed from earlier years and there are some new caveats over and above the previous ones:
 
  • Capital appreciation is a reasonable expectation only in some categories, and in certain high-demand/low supply areas
  • With some exceptions, luxury housing is currently not the best play - the preferred categories for investors currently are lower budget and mid-segment housing
  • The project should be in a well-connected location and have a decent saturation of amenities and facilities. Buyers and renters are spoiled for choice right now. Without public transport, connectivity and sufficient social infrastructure, neither capital appreciation nor rental revenue will be satisfactory regardless of other attractions a project has
  • Apart from existing social and civic infrastructure, upcoming infra projects being used to promote a project must be verified with the relevant municipal authorities
  • An optimal ‘entry point’ in terms of ticket size is critical for good returns on investment (ROI) - it should be attractive to begin with and, if possible, negotiated further. Investors must also verify historic capital values and rental rates trends
  • The brand value of the developer will also determine future appreciation potential, especially in under-construction projects. Stronger developers with better capitalisation have superior execution capabilities, are less likely to cut corners on construction materials, and won’t deviate from the committed specifications.
 
Caution on ‘Value-Adds’
 
Added attractions and easy financial structuring can be rewarding if the customer has picked the right developer and project, and has fully understood the value proposition. However, financial schemes can also be dangerous if a buyer has not understood exactly how they function and what kind of financial commitments they imply.
 
RERA requires developers to be completely transparent in their marketing outreach - including in terms of schemes and add-ons, which must all qualify as fair and transparent promotional activities. Outright misleading promotions are not allowed under the RERA regime and few players, if any, will resort to them now. (Even visuals in marketing collaterals and on hoardings meant to depict the project or its purported lifestyle quotient must be clearly mentioned as ‘representative’ and ‘artist’s impression’.)  
 
Nevertheless, many buyers tend to ignore the fine print of a seemingly attractive but inherently booby-trapped payment scheme. Ignorance in the face of information availability is not a legal recourse. If a buyer did not read the fine print, nor asked the right questions, a developer can technically not be held accountable. He becomes legally liable if there is no fine print available at all, but not if it exists and the buyer ignored it.
 
Here, the guidance of a property consultant can be invaluable.
 
White goods should only be seen as valid attractions if the property itself is of inherent value to the buyer. If an overall desirable property comes with add-ons like furnishing, modular kitchens, essential fittings and reserved parking space, there is real value. Waived stamp duty and registration charges can obviously also have positive implications on the bottom line.
 
However, none of these should tip the scales towards a purchase decision if the project is in the wrong location, does not have all legal documents (such as RERA registration), or there are other inherent location-specific defects such as unreliable utilities supply and lack of sufficient social infrastructure and public transport options.
 
Understanding Rate Cuts
 
A rate cut on the stated cost of a property is the clearest and most convincing incentive that a developer can give to his buyers. However, a rate cut should not divert focus from the real value of the property. Also, rate cuts are rarely announced officially but rather earned on the negotiation table. There are good reasons for this.
 
If some developers in a certain locality start announcing rate cuts, other developers with similar projects in the same area may have no option but to reduce their own rates to stay relevant in a competitive market. However, at the end of the day, relationships matter in the developer community and very few players will be willing to start a rate war. Therefore, announcing a hard rate cut is considered the last and least desirable option.
 
This does not mean that the ticket size cannot be reduced. Buyers can and should negotiate on the final asking rate, or get their property consultants to negotiate on their behalf. However, this is only an option if a developer sees serious intent - a seasoned player’s sales team can spot ‘window shoppers’ easily. Also, there is a logical limit to how far a negotiation can go.
 
Developers invest significant capital into land, construction and building permits and need to recover these costs with at least some profit margin. No reputable developer with a good product will sell at a loss - and just ‘breaking even’ is obviously not a desirable strategy in any business.
 
While even credible developers will negotiate with serious buyers to some extent, only weak players in deep financial pain (and probably wanting to exit the market altogether) will opt to sell at an outright loss. A reduction of 5-7% should be considered an acceptable knockdown on the overall ticket size. To push beyond this is inadvisable, and can be counter-productive.
 
To summarise, one can state that
 
  • There are currently very compelling reasons for end-users to buy homes
  • Depending on the city and location in question, investors may see wisdom in waiting for further rate corrections
  • Ready-to-move-in homes with completion certificates are the least risky and most tax-efficient bet for end-users
  • Serious investors with a long-term horizon can make calculated plays in under-construction projects to lock in the lowest possible rate
  • Serious buyers can look forward to at least some success with negotiation, within reasonable limits
 
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