Asian Paints denies poor governance allegations by proxy advisory firm Ingovern that pulled its stock down

• Shares of Asian Paints fell Thursday after proxy advisory firm Ingovern pointed out several related party transactions between Asain Paints and Paladin Paints & Chemicals, a private company owned by the promoter family of Danis.
• Later in the day, Asian Paints came out with a clarification saying that some of the information in the report by Ingovern was factually incorrect.
• Shriram Subramanian, founder and MD of InGovern, sticks to the point that the company has not put out details of the related party transactions in the first place.

One of the largest paints companies in India, Asian Paints, has come under the bus for alleged poor governance after proxy advisory firm Ingovern pointed out several related party transactions with Paladin Paints & Chemicals, a private company owned by the promoter family of Danis.

Ingovern has highlighted the conflict of interest with entities owned by promoter families who also supply raw material to the paint manufacturer.

The company Paladin Paints & Chemicals is one in question, which is currently owned and controlled by one of the promoter families of Danis. This development comes after a whistleblower reportedly months ago wrote to the country’s market regulator alleging that the Danis had enriched themselves at the cost of Asian Paints' shareholders.

“The board of Asian Paints has failed to act decisively to mitigate the conflict of interest. In the interest of good governance, the company needs to present details of the transactions – values, nature and logic - with Paladin and other related parties controlled by promoters,” said Ingovern in a report titled ‘Saving the company from promoter shareholders’.

Ingovern has further urged the market regulator to investigate and insist on detailed disclosures of related party transactions by such a large listed company.

As a solution to the issue, the proxy firm has asked the promoter directors of Asian Paints to immediately resign.

There are allegations that the company only lists the related parties and the aggregate value of related party transactions. “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,” said Ingovern.

Later in the day, on November 25, Asian Paints came out with a clarification saying that some of the information in the report by Ingovern was factually incorrect.

“The fact that Asian Paints has to point it out means that they haven't put out the details of the related party transactions (RPT) in the first place. We are stating a fact that Asian Paints hasn't given details of value, nature of, and logic for RPTs against each RPT,” said Shriram Subramanian, founder and MD of InGovern.

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