Shares of chemical firm UPL Ltd closed down nearly 11 percent Thursday on reports that a whistleblower had alleged failures in the company’s corporate governance and that its promoters had diverted funds. The complainant also alleged that UPL entered into rental agreements with a shell company owned by its employees and paid millions of rupees in rent for the latter’s properties, previously owned by the developer family.
However, the company, owned by the Shroff family, said it was an old matter and it was reported to the audit committee in 2017. After an independent investigation, the matter was closed, it said.
The stock closed at Rs 438 per share, down 10.94 percent, with a market capitalization of Rs 33,499 crore.
Jai Shroff, CEO of UPL
In a statement to the stock exchanges, UPL denied that the complainant was a member of the board. “UPL’s audit committee received an identical whistleblower complaint on June 2, 2017,” the statement said.
“The complaints committee, which was composed only of independent directors, was constituted by the audit committee to investigate the allegations and the entire content of the complaint was fully disclosed,” the statement said.
“He conducted a detailed review, including each related party transaction (RPT), with the help of an independent law firm, and had concluded two and a half years ago that these transactions were conducted at arm’s length and in compliance with the applicable laws. Subsequently, the complainant was duly informed about the conclusions of the audit committee and the matter was closed, ”the company said.
“It seems that the same complainant, motivated by bad intentions, has approached the media, raising the same issue again. UPL confirms that all the transactions in question were in market conditions and that there has been no diversion of funds, as alleged in the news article and there is no new complaint against UPL, ”the statement said.
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