The Securities and Change Board of India (Sebi) on Tuesday barred textile agency LS Industries from the securities marketplace for alleged inventory value manipulation and fraudulent practices. The markets regulator famous that LS Industries had a market capitalisation of Rs 22,700 crore on the peak.
LS Industries, regardless of having a market capitalisation of Rs 5,768 crore, reported minimal income prior to now three fiscal years. An investigation by Sebi revealed that in October 2022, former director Suet Meng Chay transferred his whole 12.12% stake within the firm to Dubai-based NRI Jehangir Panikkaveettil Perumbarambathu in an off-market deal, information reviews acknowledged.
Though the shares transferred have been valued at roughly Rs 154 crore based mostly on a share value of Rs 15 every, the transaction came about at a considerably lower cost of Rs 75 or $1 per share. Sebi’s inquiry uncovered suspicious purchase orders positioned by a number of entities on the higher circuit limits at 9 am, resulting in a major improve within the share value. These actions resulted in an 11-fold improve within the share value inside a brief span of two months.
The regulatory physique has issued a brief order prohibiting LS Industries Ltd (LSIL), together with its promoters and key people, from participating within the buying and selling of its shares and collaborating within the securities market till additional discover, as a consequence of allegations of manipulating inventory costs.
This motion follows an investigation by SEBI into LSIL, a textile firm that has reported minimal income. Regardless of recording no gross sales in two quarters of FY25, LSIL’s inventory value skilled a major surge from Rs 22.50 in July 2024 to Rs 267.50 in September—a rise of 11 occasions—earlier than plummeting to Rs 42.39 in November.
SEBI’s investigations uncovered a suspected pump-and-dump scheme involving a gaggle of merchants, together with Multiplier Share & Inventory Advisors Pvt. Ltd. and Setu Securities Pvt. Ltd. These entities have been discovered to have positioned purchase orders at higher circuit limits early on, resulting in a synthetic inflation of the inventory’s value. Subsequently, they proceeded to dump shares, leading to a major drop within the inventory’s worth.
The Sebi is ready to conduct a radical investigation by Might 15. In the meantime, Sebi has instructed the NRI to furnish a complete checklist of his belongings, investments, and financial institution accounts, in addition to to freeze any withdrawals from his accounts.
