The Securities and Exchange Board of India (SEBI) has taken action against LS Industries, its promoter, and four other entities, banning them from the securities markets until further orders. This move comes as part of SEBI’s efforts to crack down on market misconduct and ensure fair trading practices. The regulator’s decision was prompted by the discovery of bizarre and suspicious movements in LS Industries’ stock price.
Despite the company reporting near-zero revenues and increasing losses amounting to ₹8.83 crore over the past three financial years, its shares surged by an astonishing 1,089% in just two months, from ₹22.50 on July 23 to ₹267.50 on September 27 last year. SEBI’s notice, issued on February 11, highlighted the “absurdities and anomalies” in the share transactions of the Ahmedabad-based textile company. The regulator pointed out the stark disconnect between the company’s market capitalisation, which peaked at ₹22,700 crore on September 27, 2024, and its fundamental financial health.
Sebi takes action against market misconduct
Adding to the suspicion were the ambitious corporate announcements made by LS Industries between October and December 2024, including plans to venture into the AI Tech industry, the appointment of foreign nationals to its board, the incorporation of a foreign subsidiary in Dubai, and the acquisition of a 75% equity stake in Indian firm Robochef India. Further investigation revealed a perplexing off-market transaction involving Suet Meng Chay, a former director and public shareholder owning 12.12% of LS Industries.
Chay transferred his entire shareholding, worth ₹154.32 crore, to Jahangir Panikkaveettil Perumbarambathu, an NRI residing in Dubai, for just $1 on October 12, 2022, when trading of the company’s shares was suspended. Jahangir, who works as an Administration Manager at the Dubai-based Dutch Oriental Mega Yacht, later remitted money earned from selling LS Industries’ shares back to Dubai. He currently holds shares worth ₹698 crore in the company.
SEBI has resolved to conduct a detailed investigation into this matter and has frozen all bank accounts belonging to Jahangir as part of the regulatory action. The regulator’s findings underscore the need for rigorous scrutiny and regulation in financial markets to prevent irregularities and protect investors.
