Asian Paints denies allegations related to related party deals

The Company has denied allegations of a whistleblower on undue advantage to the promoters at Company’s expense and provided the necessary clarifications.

The allegation –

Reports surfaced in media that a whistleblower has made a complaint that Asian Paints (APL) entered into a transaction with one of it’s ex-employees Jayram Nadkarni and the company founded by him — Paladin Paints and Chemicals. It is alleged that APL promoter Ashwin Dani and his son Malav Dani bought this company in personal capacity with the money provided by APL.

Clarification from the Company –

  • The Company sought technical consultancy services of Nadkarni (ex-employee of the company) and Paladin Paints, the company floated by Nadkarni. APL entered into an agreement with said entity in 2005-06 and made an upfront consultancy payment of Rs 1.20 crore and paid a monthly consultancy fee of Rs 12 lakh for a period of 21 months amounting to Rs 2.52 crore.
  • At the time of entering this agreement, no related party relationship existed between APL and Paladin.
  • During 2015-16, it was informed of the acquisition of Palandin by a promoter director and since then, all the transactions with the said entity were undertaken only after necessary approvals from the Audit Committee of the board of directors and were as per the applicable provisions of law.
  • APL further said that they had received a whistleblower complaint in July after which it conducted a review of the transactions in the complaint and found the allegations baseless.

My take – these kind of transactions are quite common whereby good Companies support their valued ex-employees in varied forms – consultancy arrangements being the most common one.

It’s unlikely that promoters of APL would have decided on day one to acquire the stake in Paladin. They could have very well decided later factoring in various possibilities.

Amounts involved are so small that it’s not worth to over analyse the events.

In my last 20+ years of dealing with multiple companies across sectors, this is not of much significance.

Companies -
Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x