Shares of Aurobindo Pharma hit a 52-week low at ₹464 on Thursday after the enforcement directorate arrested the pharmaceutical company’s director P. Sarath Chandra Reddy and Benoy Babu of Pernod Ricard and one other under the prevention of money laundering act (PMLA) in the now-scrapped Delhi’s excise policy, the company notified in a regulatory filing.
“The company learnt that Mr P. Sarath Chandra Reddy, Whole Time Director / Promoter Group of the Company has been arrested by the Enforcement Directorate. The company is in the process of ascertaining further details and will do further disclosures as appropriate,” the Hyderabad-based company said in a statement.
Aurobindo Pharma is a leading pharmaceutical drug manufacturer in India, whereas Pernod Ricard is the manufacturer of alcoholic beverages Glenlivet, Chivas Regal and Ballentine's amongst others. The ED has alleged that Reddy was instrumental in the cartelization of liquor licenses.
On Thursday, the shares of Aurobindo Pharma opened a tad lower at ₹538 as against the previous closing price of ₹541. During the session, it tumbled 13.75% to hit an intraday low of ₹464. The market capitalisation of the pharmaceutical major declined to ₹28,037 crore with as many as 8.01 lakh shares changing hands in the Bombay Stock Exchange, as against two-week average volume shares of 0.43 lakh shares. In the past three months, the shares of Aurobindo Pharma have declined by more than 15%.
Meanwhile, the BSE Sensex closed 419 points 0r 0.69% lower to 60,613 on Thursday, while the NSE Nifty 50 index declined 128 points or 0.71% to 18,028.
Delhi excise policy furore
For the past several months, the ED and the AAP-led Delhi government are at loggerheads with each other owing to Delhi’s now scrapped excise policy which the government had introduced in November last year. ED has named Manish Sisodia, the deputy chief minister of Delhi as the prime accused in the case.
The now-scrapped liquor policy aimed to augment the state’s excise duty revenue by ₹9,500 crore. The AAP government said that through the new liquor policy, the government will withdraw from selling liquor, thus giving sole power to the liquor retailers for the liquor sale.
However, a report published by the Delhi chief secretary, stated severe violations in the Government of National Capital Territory of Delhi Act, 1991, Transaction of Business Rules (ToBR)-1993, Delhi Excise Act, 2009, and Delhi Excise Rules-2010. Moreover, around 200 liquor retailers reportedly closed their businesses, citing financial losses and cut-throat competition due to the new excise policy.
Following this, Delhi’s Lieutenant Governor Vinai Kumar Saxena in July ordered a CBI probe into Delhi’s excise policy 2021-22, putting Sisodia and several other government servants directly in the line of fire. Following this, the Delhi government withdrew the new liquor policy, thus putting the old liquor policy in place once again.