Delhi excise policy: ED arrests Aurobindo Pharma promotor, Pernod Ricard official

The ED and the Central Bureau of Investigation are probing a nexus of manufacturers-distributors-retailers who allegedly formed syndicates to get retail liquor licences in Delhi under the new excise policy

The Enforcement Directorate (ED) has arrested P Sarath Chandra Reddy, the full-time director and promoter of Aurobindo Pharma Group, and Benoy Babu, general manager of wine and spirits company Pernod Ricard, in connection with its money laundering probe into the Delhi excise policy 2021-22, people familiar with the development said on Thursday.

Representational image.

Reddy and Babu were arrested under the Prevention of Money Laundering Act (PMLA) as the ED suspects they were involved in the formulation of the now-scrapped controversial excise police of the Delhi government and its “cartelization”, which benefitted a certain big liquor players and business houses, according to an officer, who didn’t want be named.

The ED and the Central Bureau of Investigation (CBI) are probing a nexus of manufacturers-distributors-retailers who allegedly formed syndicates to get retail liquor licences in Delhi under the new policy. Delhi deputy chief minister Manish Sisodia is named as accused in the case and was questioned by the CBI last month.

The officer cited above said that the accused were ‘evasive’ during the questioning due to which they were put under arrest. They will be produced before a special PMLA court in Delhi on Thursday where their custody will be sought.

The ED had recovered a draft of the policy during searches in the case which revealed that investments worth ₹200 crore in the retail liquor business were made by an entity in violation of policy directives, according to a second officer, who also requested anonymity.

As reported by HT in September, Telangana-based Aurobindo Pharma Group’s linked companies – Trident Chemphar Ltd and Avantika Contractors – allegedly got retail zones 18, 21, 24 and 26 in Delhi.

The ministry of corporate affairs (MCA) data analysed by HT suggests that some of the directors at Trident are also directors in Aurobindo companies. Their liquor distributor to these retail licencees was Sameer Mahendru’s Indospirit Group. The policy stated that no company or its entities are allowed to get more than two zones.

Mahendru was arrested by the ED in September end.

Aurobindo Pharma said the company has learnt about the arrest of P Sarath Chandra Reddy. “The Company learnt that P. Sarath Chandra Reddy, Whole Time Director/Promoter Group of the Company has been arrested by Enforcement Directorate. The Company is in the process of ascertaining further details and will do further disclosures as appropriate,” Aurobindo Pharma said in a regulatory filing on Thursday.

Later, they issued a statement saying, “Further to the disclosure of even date, Company further learnt that the arrest of Mr. P. Sarath Chandra Reddy, Whole Time Director / Promoter Group of the Company is not in any way connected with the operations of Aurobindo Pharma Limited or its subsidiaries.”

Shares of Aurobindo Pharma tumbled over 6 per cent to a low of ₹508.50 on the Bombay Stock Exchange in Thursday’s intra-day trade following reports of arrest of Reddy.

Aurobindo makes a range of medicines from anti-bacterials to antidepressants. Reddy, a business administration graduate, belongs to the promoter group of the company, which has manufacturing plants in the United States, Brazil and Portugal, according to its website.

HT has reached out to Pernod Ricard for its comments. Manoj Rai, a former employee of the liquor maker, is already named in the CBI and ED cases in the matter.

The ED earlier this month raided the premises of a personal assistant of Sisodia and later questioned him at its office in Delhi.

The Delhi government’s 2021-22 excise policy aimed to revitalise the city’s flagging liquor business. It aimed to replace a sales-volume based regime with a licence fee for traders, and promised swankier stores, free of the infamous metal grilles, ultimately giving customers a better buying experience. The policy also introduced discounts and offers on the purchase of liquor, a first for Delhi.

The plan, however, came to an abrupt end, with Delhi’s lieutenant governor Vinai Kumar Saxena recommending a CBI probe into the alleged irregularities in the regime. This ultimately resulted in the policy being prematurely scrapped and replaced by the 2020-21 regime, with the ruling Aam Aadmi Party in the national capital alleging that Saxena’s predecessor sabotaged the move with a few last-minute changes that resulted in lower-than-expected revenues.