Lalitha Jewellery: Promoters face tighter scrutiny following SEBI summons
New Delhi : Lalithaa Jewellery Mart’s Draft Red Herring Prospectus (DRHP) showed that the company, its subsidiaries, promoters, directors and key managerial personnel are involved in certain legal and regulatory proceedings pending before various tribunals, quasi-judicial authorities and appellate forums.
According to the DRHP filed with the Securities and Exchange Board of India (SEBI), the company has disclosed one criminal proceeding and two tax proceedings against its promoters, while the aggregate amount involved in the disclosed proceedings is stated at Rs 586.59 million, or about Rs 58.66 crore.
The DRHP also details summons issued by SEBI to the company’s promoters, M. Kiran Kumar Jain and Hemaa Kiran Kumar Jain, in February 2022 in connection with an investigation into the scrip of Krishana Fabrics Ltd, a company in which one of the promoters holds a majority shareholding.
SEBI had alleged in its summons that there were reasonable grounds to believe that transactions in the securities of Krishana Fabrics were being conducted in a manner detrimental to investors and the securities market. The summons also referred to alleged violations of the SEBI Act, 1992 and the SEBI (Prohibition of Insider Trading) Regulations, 2015.
The regulator had sought several documents and details from the promoters, including trade details, income-tax returns, disclosures made to Krishana Fabrics and stock exchanges, bank account details and sources of funds.
The promoters responded to the SEBI summons through letters dated February 16, 2022. Later, on August 10, 2024, M. Kiran Kumar Jain and Hemaa Kiran Kumar Jain again wrote to SEBI, stating that they had already responded to the summons in February 2022 and had not received any further communication from the regulator.
As of the date of the DRHP, no proceedings or action had been initiated by SEBI against the promoters in connection with the matter, according to the document.
The company cautioned that adverse developments in the disclosed legal proceedings could result in additional liabilities and expenses. It also said that such proceedings could divert management time and resources and potentially affect its profitability, reputation, financial condition and results of operations.