Asian Paints clarifies on news item – Business Standard

The media reported that a whistle blower flagged off related party transactions (RPTs) carried out by the promoters of Asian Paints.

According to media reports, the whistle-blower informed Securities and Exchange Board of India (SEBI) that money to buy a company called Paladin Paints and Chemicals (PPC) went from Asian Paints but its promoters Ashwin Dani and son Malav now control it in their personal capacity. SEBI has reportedly sought further details from the whistle-blower.

Following the allegation, Asian Paints clarified to the bourses on 24 October 2021, that the company had entered into a technical consultancy agreement with Jayram Nadkarni (ex-employee of the company) and Paladin Paints and Chemicals during the financial year 2005-2006.

Pursuant to this agreement, an upfront consultancy charge of Rs 1.20 crore and a monthly consultancy of Rs 12 lakh for a period of 21 months amounting to Rs 2.52 crore was paid to him for providing necessary technical consultancy, technology knowledge package and process for manufacturing of resins to the company with respect to the products governed by the agreement. As he was an ex-employee, he provided this technical service exclusively to the company. There was no related party relationship existing at this point of time.

Subsequently during 2015-16, the company was informed of the acquisition of interest by a promoter director in Paladin Paints & Chemicals and since then, all the transactions (purchase and processing of goods) undertaken with the said entity have been pursuant to necessary approvals from the audit committee of the board of directors of the company and in accordance with the applicable provisions of law.

The paint major further clarified that a complaint was received in July 2021, from an individual, not related to the company, alleging impropriety with respect to certain related party transactions entered into by the company. The said complaint was investigated in accordance with the company’s whistle blower policy. After undertaking a detailed review of the transactions which were mentioned therein, the said complaint was closed as the enquiry concluded that the transactions were undertaken in compliance with law, and there was no basis for the allegations made.

The company had also received e-mail enquiries from SEBI and the National Stock Exchange of India, seeking details of the said transactions. The company has provided all necessary details and explanations sought by the said authorities, along with an overview of the processes followed for approval of related party transactions.

“As a company, we would like to reiterate that all transactions involving related parties are undertaken in strict compliance with the provisions of law and necessary disclosures have been made in accordance with the applicable disclosure norms from time to time,” Asian Paints said in a statement.

On a consolidated basis, Asian Paints’ revenue from operations has increased by 32.6% to Rs 7,096.01 crore in Q2 September 2021 from Rs 5,350.23 crore in Q2 September 2020. Profit before depreciation, interest, tax and other income (PBDIT) for the group (before share in profit of associates) decreased by 28.5% to Rs 904.45 crore from Rs 1265.20 crore. Profit Before Tax (PBT) decreased by 27.9% to Rs 826.24 crore from Rs 1,145.52 crore. Net profit after non-controlling interest decreased 28.2% to Rs 595.96 crore as against Rs 830.37 crore in the previous corresponding period.

Asian Paints is a leading paint company of India. The company along with its subsidiaries has operations in 15 countries across the world with 26 paint manufacturing facilities, servicing consumers in over 60 countries.

Shares of Asian Paints fell 2.18% to Rs 2919.60. The stock hit a high of Rs 2949.45 and a low of Rs 2855.60 so far during the day.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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