Meet Sudhir Valia, Sun Pharma's director, one of India's prolific investors

Not many could guess that the yellow, dilapidated building in Dadar in Central Mumbai houses one of India's most prolific investors. In keeping with his low-key persona, Sudhir Vrundavandas Valia, the 62-year old whole time director of Sun Pharmaceutical, wants to remain out of the news. 

But brother in law of Sun Pharma's promoter and managing director, Dilip Shanghvi, is making headlines for all the wrong reasons. The stock markets are punishing Sun Pharma for not disclosing a $325 million loan to an employee and for a whistle-blower letter sent to the Sebi which makes several allegations of insider trading and questionable real estate and stock market transactions involving Valia. Sun Pharma has denied these allegations.

Since the news became public on November 26th, Sun Pharma has lost 19 per cent of its market value worth Rs 232 billion. Of this, the promoters themselves have lost Rs 126 billion of wealth.  Valia's personal wealth is also down to Rs 42 billion, thanks to the fall in the value of his 3.98 per cent stake in Sun Pharma and 4.5 per cent stake in another listed firm, Sun Pharma Advanced Research.

Interestingly, till recently Valia-owned companies Lakshdeep Investments and Finance Private Limited (LIFPL), Suraksha Realty and  Surakhsa Asset Management Company were in news for making a bid for Jaypee Infratech which owns vast tracks of land bank on both sides of Delhi-Agra Expressway.  Jaypee was sent to the NCLT after it defaulted to bank debt worth Rs 100 billion and Lakshdeep was one of the five bidders.

Sun insiders said Valia, who joined Sun Pharma in 1994 and is a chartered accountant,  has been involved with taxation and finance at the company since the company's initial years. But over the years, he was more involved in investing in other companies.  Visitors to his non-descript Dadar office say Valia is a devotee of Lord Ganesha and his office is decorated with a multitude of Ganesha idols. 

While Valia did not answer several phone calls to his office, insiders said it is Shanghvi and Valia who take all the calls on how to run Sun Pharma. "Whatever decision Valia takes, it is in concurrence with Shanghvi," said a former employee.

Earlier, Valia was known primarily within India's pharmaceuticals fraternity. But in 2012, Valia had announced a surprise investment in picking up 26 per cent stake in Telenor which thrust him into the limelight.  His real estate transactions in the last couple of years further bought him into the spotlight. Many of these real estate investments has turned sour as demonetisation hit the sector hard. 

Many have speculated it was Shanghvi who has pumped his own money through Lakshdeep.  But Valia, in earlier interviews to this paper, denied allegations that Shanghvi invested in his personal investment companies.

Lenders said Suraksha Realty and Lakshdeep raised funds against Sun Pharma and Sun Pharma Advanced Research Company Limited (SPARC) shares held by LIFPL, its subsidiary and the individual directors. The borrowings was not to exceed Rs 35 billion and analysts said while calculating this limit, entire borrowing, as well as all contingent exposures of LIFPL and its subsidiaries, was taken into account.  The cover (i.e. the ratio of market value of Sun Pharma and SPARC shares held by Valia Group to total borrowings) was always be at least 1.75 times at all times.  

What may worry the lenders of Suraksha Realty is  that its profits dropped to Rs 93 million in fiscal ending March 2018 from Rs 530 million in fiscal 2017 and Rs 950 million reported in fiscal 2016. The sales of Suraksha Realty also dropped tp Rs 1.66 billion in fiscal 2018 as compared to Rs 1.88 billion as on Fiscal 2017.  The consistent fall in Surakha's fortunes may not be good news for the company which is trying to take over Jaypee's massive real estate.

As investigations by Sebi picks up in the coming days on the allegations made by the whistleblower, Valia may now find it difficult to stay away from the spotlight despite operating from a dilapidated building in Central Mumbai.