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Asian Paints denies allegations of poor corporate governance standards

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This is in regard to several related party transactions between the company and Paladin Paints & Chemicals, a private company owned by the promoter Dani family.

Asian Paints denies allegations

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Asian Paints Ltd (APL) on Thursday denied charges of poor corporate governance standards with regard to several related party transactions (RPT) between the company and Paladin Paints & Chemicals (Paladin), a private company owned by the promoter Dani family.

The clarification came after a report from proxy advisory firm InGovern alleged conflict of interest between the promoter directors who own Paladin and other companies supplying goods to Asian Paints.

InGovern had also said that the board of the company had failed to act decisively to mitigate the conflict of interest and there was inadequate disclosure of the value of related party transactions and logic thereof, thus leaving the issue a “bit cloudy”.

Calling upon Sebi to investigate, InGovern  said the company needs to present details of the transactions with Paladin and other related parties.

Its report said that even after informing on April 22, 2015 that the Dani family had acquired controlling interest in Paladin, the family members continue to be associated with Asian Paints .

It further disclosed that APL’s 2015-16 annual report lists Paladin as a related party from April 22, 2015, but the company, unlike most others, does not list out the value of related party transactions.

In 2019-20, the proxy advisory firm said that Asian Paints procured over 5.8 per cent of its raw materials from companies controlled by promoters. This stood at 6.6 per cent in the preceding fiscal and 6 per cent the year before .

In a clarification issued to the bourses on Thursday, APL said that the report contained certain factually incorrect information. It said that out of Rs 553.88 crore of purchases from related parties during 2019-20, purchase from Paladin was Rs 1.3 crore which is lower than 0.2 per cent. It said that it has in the past also “adequately” responded to all aspects on transactions with Paladin.

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