Sun Pharmaceutical Industries Limited
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Briefing
Sun Pharmaceutical Industries Limited — the brief
Forensic posture: Material flags. Sun Pharma's auditor gave an unqualified clean bill, earnings quality is excellent with strong cash generation, but the company has ₹29.6 Cr in material related-party borrowings from subsidiaries (notably ₹10,955 Cr unsecured loan now due March 2026) and a ₹1,345 Cr income tax dispute that jumped 4.6x year-on-year, both of which warrant close monitoring.
Auditor’s report (CARO 2020)
Auditor’s assessment Clean. Auditor: S R B C & CO LLP. Opinion: Unqualified. Fiscal year FY24-25.
Related-party transactions
Assessment Notable. Disclosed volume of ₹36,000 Cr across 60 related parties. Fiscal year FY24-25.
- ₹10,954 Cr unsecured loan from subsidiary outstanding: Sun Pharma (standalone) has borrowed ₹109,544.7 Million (≈₹10,955 Cr) on an unsecured basis from its subsidiary Sun Pharma Laboratories Limited (a wholly-owned subsidiary) at 7.5% p.a., now reclassified as current and due by March 2026; whi
- ₹11,869 Cr loans taken from subsidiary during year: During FY25, the company took fresh loans of ₹118,692.2 Million (≈₹11,869 Cr) from Sun Pharma Laboratories Limited and repaid ₹119,507.6 Million, indicating ongoing high-frequency revolving treasury usage through a subsidiary entity.
- ₹1,842 Cr accrued interest payable to subsidiary: Accrued interest on borrowings from subsidiary (Sun Pharma Laboratories Limited) stands at ₹18,423.1 Million (≈₹1,842 Cr) as at March 31, 2025, a sharp increase from ₹10,772.0 Million in the prior year, reflecting compounding interest on th
- ₹1,865 Cr reimbursements paid to subsidiaries: The company paid ₹18,652.3 Million (≈₹1,865 Cr) as reimbursement of expenses to related parties (predominantly subsidiaries, including ₹11,985.7 Million to Sun Pharmaceutical Industries, Inc. alone), a material outflow whose nature warrants
Contingent liabilities
Assessment Concerning. Total disclosed: ₹3,180 Cr (4.4% of net worth). Fiscal year FY24-25.
- Income tax disallowances/additions under Company appeal; department appeals ₹22,194.4 Mn (vs ₹2,934.4 Mn prior year — 4.6x jump)
- Drug Price Equalisation Account (DPEA) demand for unintended benefit
- Antitrust Lipitor (Atorvastatin) class action; appeals pending before Third Circuit
Corporate governance
Board of 8 directors, 63% independent. Chair: Dilip Shanghvi. Chair and CEO roles are combined. Statutory auditor: S R B C & CO LLP. Fiscal year FY24-25.
“Unsecured loan from related party of ` 109,544.7 Million (March 31, 2024: ` 110,360.1 Million). The loan was taken on March 31, 2021 and is repayable by March 31, 2026. The interest rate is 7.5 % p.a.”
What retail misses·The ₹10,955 Cr unsecured subsidiary loan maturing March 2026 and the ₹1,345 Cr income tax contingent liability (up from ₹22 Cr two years ago) are buried in the RPT and contingent liability schedules of the annual report—they rarely appear in news coverage or social-media stock screeners, yet represent material near-term refinancing and litigation risk.
Strengths noted in disclosures: Auditor opinion is unqualified with zero high, material, or minor flags—full clean disclosure. · Earnings quality composite score of 89 (excellent) with low manipulation risk, cash matching profit, and top-decile profitability metrics. · Altman Z-score of 12.31 places company in safe zone with low bankruptcy risk; robust leverage and asset productivity.
Forensic signal
From the company's own filingsStrong: Momentum · 52-Week · Size · Weak: Valuation · Yield