UPL shares slump on fund-diversion charge; firm denies allegations

Shares of chemical firm UPL Ltd closed nearly 11 per cent down on Thursday on reports that a whistle-blower had alleged corporate governance lapses in the company and that its promoters had siphoned off funds. The whistle-blower also alleged that UPL entered into rent deals with a shell company owned by its employees and paid crores of rupees in rent for properties held by the latter, which was earlier owned by the promoter family.

The company, owned by the Shroff family, however, said this was an old matter and was reported to the audit committee in 2017. After an independent probe, the matter was closed, it said.

The stock closed at Rs 438 a share, down 10.94 per cent, with a market capitalisation of Rs 33,499 crore.

UPL CEO Jai Shroff

In a statement to the stock exchanges, UPL denied that the whistle-blower was a member of the board. “An identical whistle-blower complaint was received by the audit committee of UPL on June 2, 2017,” the statement said. 

“The whistle-blower committee, which comprised only independent directors, was constituted by the audit committee to investigate the allegations and all the contents of the complaint were fully disclosed,” the statement said.

“It undertook a detailed review, including each related party transaction (RPT), with the help of an independent law firm, and had concluded two and half years back that those transactions were at arm’s length and in compliance with applicable laws. Thereafter, the complainant was duly informed about the findings of the audit committee and the matter was closed,” the company said.

“It appears that the same whistle-blower, motivated by mala fide intentions, has approached the media, raising the same issue again. UPL confirms that all transactions in question were on an arms-length basis and that there has been no siphoning of funds, as alleged in the news article and there is no new complaint against UPL,” the statement said.