UPL Stock Ends 11% Lower On Report Of Whistleblower Complaint
Agrochemicals maker UPL Corporation has arranged €100 million loan at zero interest rate to meet the working capital requirements across the group. (Photographer: Prashanth Vishwanathan/Bloomberg)

UPL Stock Ends 11% Lower On Report Of Whistleblower Complaint

Shares of UPL Ltd. fell the most since March to be the worst performer on the Nifty 50 after a report by ET Prime cited a whistleblower complaint alleging wrongdoing in rent deals.

In an interaction with CNBC-TV18, however, the agrochemical maker’s Global Chief Executive Officer Jaidev Shroff refuted the allegations, saying the report is “completely malicious” and the board has not received any whistleblower complaint.

The company, in a clarification to the exchanges, said there was no new complaint against it. “UPL believes that there is a sustained campaign to malign the image of the company and the group,” it said in an exchange filing. It also denied that the whistleblower is a member of the board as reported in the news report.

“An identical whistleblower complaint was received by the audit committee of UPL on June 2, 2017. The whistleblower committee, which comprised only independent directors, undertook a detailed review, including each related party transaction, with the help of an independent law firm and had concluded that two-and-a-half years back that those transactions were at an arm’s length, and in compliance with applicable laws,” the filing said. “The complainant was duly informed of the findings of the audit committee and the matter was closed.”

UPL, in the filing said, “It appears that the same whistleblower, motivated by malafide intentions, has approached the media raising the same issue again.”

The company reiterated its defence in a conference call later in the day. It has yet to respond to BloombergQuint’s emailed queries.

“Despite the good performance of the business, the whistleblower complaint and change in auditors earlier this year for the company’s Mauritius unit is impacting sentiment,” Abhimanyu Sofat, head of research at IIFL Securities, told Bloomberg over the phone.

Shares of UPL ended 11% lower at Rs 438.45, despite the clarification issued by the company.

Of the 35 analysts tracking UPL, 32 have a ‘buy’ rating, two suggest a ‘hold’ and one recommend a ‘sell’. The average of Bloomberg consensus 12-month target prices implies an upside of 40.1%.

Concall Highlights

  • The management called the allegations untrue.

  • The chairman of audit committee said none of the past or existing board members or audit committee members had complained.

  • The promoters said none of the eight shell companies mentioned in the news article were a related party and none of its promoters or employees have any ownership in these entities.

  • Lease agreement with Sadafuli ended in 2019 and there was no renewal.

  • An identical complaint was filed in 2017, which was adequately addressed and resolved at that time; no new complaint received.

  • The management is considering taking legal advice in the matter and will take appropriate action.

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