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Last Updated : Jan 22, 2019 09:38 AM IST | Source: Moneycontrol.com

Sun Pharma surges 4% on co scraps Aditya Medisales arrangement

India’s largest drugmaker is likely contemplating discontinuing the super stockist arrangement with Aditya Medisales (AML), sources told Moneycontrol.

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Shares of Sun Pharma soared in trade after multiple sessions of weak trades. Investors are likely to have bet on the stock due to possible bottoming out of prices as well as reports of some action by the company on Aditya Medisales.

India’s largest drugmaker is likely contemplating discontinuing the super stockist arrangement with Aditya Medisales (AML), sources told Moneycontrol.

“They are doing away with AML as super stockiest,” said a person with knowledge about the matter on condition of anonymity.

“They are internally debating whether to take it (AML) inside the company, or give it to some third party, depending upon where they can save the money,” the source said.

A spokesperson of Sun Pharma told Moneycontrol the company is evaluating all the options.

Sun Pharma’s domestic formulation business is entirely routed through a promoter-owned entity called AML, a super stockist that was declared as a related party of the company only during FY18.

In an analyst call in December 2018, Sun Pharma said the arrangement with AML was made for an efficient tax structure and it is ready to review if investors aren't comfortable.

AML had revenues of Rs 8,000 crore in FY18.

Sun Pharma stock took a hit last week, with shares dropping 12 percent on intraday trading on December 18. This was on reports of a whistleblower complaint to Securities and Exchange Board of India (SEBI) alleging transactions over Rs 5,800 crore between AML and Suraksha Realty, controlled by Sun Pharma’s co-promoter, Sudhir Valia out of the money generated from the publicly-listed company.

At 09:30 hrs Sun Pharmaceutical Industries was quoting at Rs 414.55, up Rs 16.20, or 4.07 percent.
First Published on Jan 22, 2019 09:33 am
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