Asian Paints denies reports on related party deals

NEW DELHI:  After whistleblower allegations of related party transactions benefiting the promoter at the cost of other shareholders were reported in the media, the management of Asian Paints has clarified to the exchanges that the said transactions were undertaken only after necessary approvals from the audit committee and were in compliance with the law.

A whistleblower has made a complaint that Asian Paints entered into a transaction with one of its ex-employees Jayram Nadkarni and the company founded by him — Paladin Paints and Chemicals.

It is alleged that Asian Paints promoter Ashwin Dani and his son Malav Dani bought this company in personal capacity with the money provided by Asian Paints Ltd (APL).

Asian Paints has clarified that it sought technical consultancy services of Nadkarni and Paladin Paints, the company floated by Nadkarni.

According to the statement issued to exchanges, 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.

It says at the time of entering the agreement with Nadkarni and Paladin, no related party relationship existed between APL and Paladin.

However, APL says that 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.

The company further said 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.