Aurobindo Pharma Plunges 4 Per Cent After CBI Allegation

The shares of Aurobindo Pharma have tanked by nearly 4 per cent after the Central Bureau of Investigation (CBI) alleged that it had links with Y S Jagan Mohan Reddy who has already been accused in a disproportionate assets’ case filed by it. According to media reports, the company’s managing director and company secretary have also been named in the case filed against Reddy. The CBI has also filed a charge-sheet naming 13 other accused and Aurobindo Pharma has been allegedly involved in a land allotment deal.

Aurobindo Pharma was allotted 75 acres of land near Hyderabad for the sum of Rs 7 lakhs per acre against the market price of Rs 15 lakhs per acre. According to a newspaper report in DNA, the company is accused of colluding with the officials of the Andhra Pradesh Industrial Infrastructure Corporation in acquiring the allotment and transferring it to its group companies. The CBI has tried to form a link by indicating that Aurobindo’s managing director, through his family members and business entity, made an investment of Rs 10 crore in one of the companies owned by Reddy. The CBI has also accused the son of Aurobindo’s chairman for deriving undue benefits from the then state government. Besides Aurobindo Pharma, the CBI has also accused another Hyderabad-based private pharma company called Hetero Drugs.

Of late there have been several issues related to mismanaged corporate governance. For instance, there have been scams related to 2G spectrum allocation, IPOs, mining, coal blocks, etc, all of which can be attributed to illegal dealings and bad governance. Such actions have taken a toll on companies involved in such scams. Most of the companies which were named in the IPO scam are still downplaying the broader indices.