The Securities and Exchange Board of India (SEBI) has barred LS Industries Ltd. and five other entities from trading in the stock market until further notice. The regulatory authority took this action after uncovering bizarre movements in the company’s stock price.
An investigation revealed that LS Industries’ shares skyrocketed over 1,000% within two months, despite the company reporting nearly zero revenue and increasing losses. The company’s stock price surged from ₹22.50 to ₹267.50 between July 23 and September 27 of the previous year. However, the shares later plummeted to a low of ₹42.39 on November 21, before rising again to ₹136.87 by December 23.
SEBI highlighted the disconnect between the company’s market capitalization, which peaked at ₹22,700 crore on September 27, 2024, and its fundamental financial health. LS Industries reported negligible revenues and significant losses over the past three financial years starting FY22. The investigation also found anomalies in corporate announcements made by LS Industries between October and December 2024.
SEBI investigates bizarre stock movements
These included venturing into the AI Tech industry, appointing foreign nationals to its board, incorporating a foreign subsidiary in Dubai, and acquiring a 75% equity stake in Indian firm Robochef India. One particularly strange transaction involved the company’s former director, Suet Meng Chay, who sold his entire 12.12% shareholding to Jahangir Panikkaveettil Perumbarambathu, an NRI residing in Dubai, for just $1 (approximately ₹75 based on exchange rates at the time).
The off-market transaction included nearly 10.30 crore shares worth at least ₹154.32 crore. SEBI found it suspicious that these shares were transferred for practically nothing. Jahangir, who had little previous trading activity, was identified as an Administration Manager at Dubai-based Dutch Oriental Mega Yacht.
His financial transactions showed that the proceeds from manipulated stock sales were remitted to Dubai. Jahangir still holds shares worth ₹698 crore in LS Industries. SEBI has ordered a detailed investigation into LS Industries’ stock price manipulation and has frozen all bank accounts associated with Jahangir.
This swift action underscores the importance of regulatory oversight in ensuring fair trading practices and protecting investors from market manipulation.
