Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Hindu
The Hindu
National
Vignesh Radhakrishnan, Vasudevan Mukunth

Many pharma companies that bought electoral bonds faced regulatory actions

On March 15, The Hindu reported that many top purchasers of electoral bonds had also been under the Enforcement Directorate’s (ED) or the Income Tax (I-T) Department’s scanner at some point in the last five years. Of the six firms so listed, some had purchased all the bonds in the days following the searches while others had purchased a significant amount much later. A closer look at the electoral bond data released indicates more companies — including many pharmaceutical ones — purchased bonds as well as were at the receiving end of ED/I-T and/or other regulatory action.

Complete coverage | Making sense of the electoral bonds data

Pharma companies

In alphabetical order:

Hetero — In April 2022, Hetero Drugs Ltd. and Hetero Labs Ltd. each purchased ₹20 crore’s worth of electoral bonds. Six months earlier, on October 6, 2021, after raiding the offices of the Hetero pharmaceutical group across six states, the Income Tax Department reported detecting an “unaccounted income” of ₹550 crore. In the same raid, the Department had also seized ₹142 crore in cash and allegedly incriminating “evidence” stored in documents, USB drives, and “digital media”. In December the same year, residents of a village in Visakhapatnam district demanded local authorities act against Hetero Drugs Ltd. because, they alleged, it had laid a three-feet-wide and 4-km-long pipe without the requisite clearances. In all, these two firms purchased bonds worth ₹55 crore.  

Bandi Parthasaradhi Reddy, the chairman of the Hetero group, invested in Hazelo Lab and Hindys Lab, among others, and both Hazelo and Hindys purchased electoral bonds as well: for ₹2.5 crore each on July 6, 2022, and for ₹10 crore each on April 12, 2023. Hindys also purchased another tranche worth ₹5 crore on July 12, 2023. In early 2022, the National Mission for Clean Ganga issued directions to 117 units — including Hazelo — regarding the operation of effluent treatment plants in February-May 2022. 

MSN — Also in April 2022, Hyderabad-based MSN Pharmachem Pvt. Ltd., of the MSN Group and producer of active pharmaceutical ingredients for drugs, purchased bonds worth ₹20 crore as well. A year earlier, on February 24, 2021, IT department officials had alleged finding ₹400 crore of unaccounted income in the books of the MSN Pharma Group and ₹1.6 crore in cash. By January 20, 2022, MSN was one of 10 makers of generic drugs in India to sign sublicensing agreements to manufacture the COVID-19 antiviral drug molnupiravir and supply it in 105 countries. MSN Pharmachem purchased another tranche of electoral bonds, worth ₹6 crore, on November 16, 2023.

Divi’s Labs — On July 5, 2023, Divi’s Labs purchased electoral bonds worth ₹20 crore, and another tranche worth ₹35 crore on October 11 the same year. During the pandemic, Divi’s developed an indigenous process to manufacture hydroxychloroquine and favipiravir – two repurposed drugs the Indian government approved for use against COVID-19 in 2020 even though scientific evidence contradicted claims of their efficacy. The IT department had earlier raided the company’s headquarters, research centre, and manufacturing sites, per an official statement, on February 14-18, 2019, and reported finding no irregularities.

Intas — On October 10, 2022, Intas Pharmaceuticals Ltd. purchased electoral bonds worth ₹20 crore. In December 2022, the U.S. FDA flagged serious quality control issues amounting to what it called a “cascade of failure” at an Intas facility in Ahmedabad, following an inspection from November 22 to December 2. The verdict noticeably disrupted the supply of a chemotherapy drug called cisplatin to the U.S.

Lupin — On January 25, 2023, Lupin had purchased bonds worth ₹18 crore. In late 2022, Lupin had been rapped by the U.S. Food and Drug Administration for allegedly subpar drug-making conditions at four of its facilities in India. The FDA conducted another inspection at Lupin’s facility in Pithampur, Madhya Pradesh, in March 2023, and concluded with a ‘voluntary action indicated’ classification — meaning “objectionable conditions or practices” that were up to Lupin to rectify.

Mankind — On November 11, 2022, Mankind Pharma Ltd. purchased bonds worth ₹24 crore, its sole transaction, months ahead of its much anticipated IPO, which happened in May 2023 with a value of ₹4,326 crore. Two days later, the I-T Department raided Mankind’s premises over allegations of tax evasion.

Micro Labs — The I-T Department searched more than 40 offices of Bengaluru-based pharmaceuticals major Micro Labs Ltd. on July 6, 2022. Micro Labs is the maker of the ubiquitous paracetamol tablet Dolo 650. Officials also searched the residences of its owners. In the same month, the Indian government said the searches revealed “substantial incriminating evidence” of unethical practices and freebies to medical professionals to the tune of ₹1,000 crore.

The same month, the National Pharmaceutical Pricing Authority (NPPA) asked the Indian Pharmaceutical Alliance (IPA) to investigate the matter. The NPPA is an independent regulator attached to the Department of Pharmaceuticals in the Ministry of Chemicals and Fertilisers, and is responsible for pricing drugs to keep them affordable. In September, the IPA cleared the company in a report to the NPPA, declaring the “Rs-1,000-crore expenditure on single brand Dolo 650 on freebies in one year” to be “not correct”.

A month later, Micro Labs purchased electoral bonds worth ₹6 crore, an additional set worth ₹3 crore on November 15, 2022, and another ₹7 crore’s worth on October 9, 2023, taking the total tally to ₹16 crore.

Natco — On October 5, 2019, Natco purchased bonds worth ₹25 lakh, and in October and November 2023, worth ₹32 crore. In all, Natco purchased bonds worth ₹69.25 crore. From August 5 to 9, 2019, the U.S. FDA inspected a Natco facility in Mekaguda, near Hyderabad, and concluded with six ‘observations’. Natco responded that it would specify justification and corrective actions in two weeks. Similarly, following an inspection of a Natco facility in Rangareddy district, Telangana, from October 9 to 18 in 2023, the FDA reportedly found unclean and ill-maintained equipment that could contaminate the drugs being made there.

My Home Constructions

My Home Infrastructures Private Limited purchased electoral bonds worth Rs 24.5 crore. The first transaction of Rs 15 crore was purchased on July 6, 2023 and the second transaction of Rs 9.5 crore was on November 16, 2023. The company was searched by the I-T Department in July 2019. According to media reports, My Home Construction also came under scrutiny by the Union Environment Ministry’s regional officer in Chennai after then Malkajgiri MP (and current Telangana chief minister) A. Revanth Reddy alleged it violated environmental norms at a real estate project in Narsingi.

​​The Allana group

Three companies — Frigorifico Allana Private Ltd., Allana Cold Storage Private Ltd., and Allanasons Private Ltd. — are all registered at the same address in Mumbai, share directors, and purchased electoral bonds worth ₹6 crore. On July 9, 2019, Allana Cold Storage bought bonds worth ₹1 crore; Allanasons and Frigorifico Allana bought bonds worth ₹2 crore each. On October 9, 2019, Allanasons purchased bonds for another ₹1 crore.

The Allana Group is one of India’s leading exporters of processed food, particularly meat. According to media reports, beginning in 2017, when Yogi Adityanath became the chief minister of Uttar Pradesh for the first time, public campaigns against illegal cow slaughters and government programmes to encourage farmers to keep their cows instead of sending them to slaughter had a major impact on the Allana group, which owns many slaughterhouses and meat processing plants in the State.

In January 2019, the I-T Department reportedly searched the group’s offices in Mumbai. In April the same year, the Department alleged the group had evaded ₹2,000 crores in tax. Later the same year, and just before the assembly polls in Maharashtra, the group purchased the electoral bonds.

With inputs from Jasmin Nihalani

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.