NEW DELHI: Related-party transactions with Paladin Paints and Chemicals Private Limited, which is owned by promoter directors, have come back to haunt Asian Paints once again as proxy advisory firm InGovern has red-flagged the transaction.
InGovern, in its report, has raised serious allegations of conflict of interest and non-disclosures of the value of related party transactions. InGovern has alleged that Paladin Paints is not the only related party controlled by the promoters, but there are more.
It says that Asian Paints procured goods from other entities/companies that are controlled by promoters, however, it is not clear as to which are these entities and the value of goods procured from these entities.
Paladin Paints and Chemicals is allegedly controlled by Asian Paints promoter Ashwin Dani and his son Malav Dani through a firm called Ria Enterprises, controlled by the Dani family. According to InGovern, Ria Enterprises holds 93.08 per cent in Paladin.
The report went on to say Asian Paints has made inadequate disclosure of value of related-party transactions and logic thereof, with Paladin and other promoter-controlled entities. "The lack of detailed disclosure and intent of procuring such a high percentage from companies, including Paladin, that are owned by promoters of Asian Paints is strange," says InGovern.
It says that in FY2019-20, Asian Paints procured over 5.8 per cent of its raw materials from companies controlled by promoters. Paladin itself formed only 7 per cent of the value of goods purchased from promoter-controlled entities.