SEBI Imposes Rs 12 Lakh Fine On LCC Infotech And Promoters For Financial Misrepresentation
The regulator levied a penalty of Rs 6 lakh on LCC Infotech and a Rs 1 lakh fine each on Kirti Lakhotia, Sidharth Lakhotia, Pratik Lakhotia, Kamaljit Singh, Rajat Sharma and Mayur P Shah.
(SEBI building. Photo Source: NDTV Profit)
SEBI on Tuesday slapped fines totalling Rs 12 lakh on seven entities, including LCC Infotech and its promoters -- Kirti Lakhotia, Sidharth and Pratik Lakhotia -- for misrepresenting the financial statements of the company.
The regulator levied a penalty of Rs 6 lakh on LCC Infotech and a Rs 1 lakh fine each on Kirti Lakhotia (Chairperson and MD), Sidharth Lakhotia (CEO), Pratik Lakhotia, Kamaljit Singh, Rajat Sharma and Mayur P Shah.
In a 39-page order, SEBI found that LCC misrepresented its financial statements for financial year 2021-22 by not making provisions/impairment on loans, debtors and investments as per applicable accounting standards and did not make certain disclosures about related party transactions in the annual report for the financial year 2019-20, financial year 2020-21 and financial year 2021-22.
SEBI observed that Kirti Lakhotia, as managing director, failed in her duty to ensure accurate financial reporting, neglected to oversee related party transactions effectively, and disregarded the necessary disclosures under SEBI disclosure rules.
By allowing misrepresentations in financial statements and omitting key disclosures, Kirti not only compromised the company's transparency but also failed to uphold the fiduciary responsibility expected at her level, the regulator said in the order.
Similarly, SEBI found that Sidharth and Pratik in their executive roles endorsed inaccurate financial statements and provided false certifications, thus misleading the board and undermining accountability.
Further, Kamaljit, Sharma and Shah, as audit committee members, failed to scrutinise critical financial elements, including the review of significant non-performing assets and other red flags, reflecting a lack of due diligence, it added.
The order came after SEBI received a reference from the NSE in respect of LCC. NSE raised a primary concern over the value reported by the company of the investment, loan (assets) and trade receivables, which constitute 94 per cent of the company's total assets in the financial year 2021-22.
Under the preliminary examination, the matter was taken up for detailed investigation. The period of investigation was from April 2021 to March 2022.
According to the investigation, Sebi initiated adjudicating proceedings against LCC, Lakhotias, Singh, Sharma and Shah for violating the provisions of LODR (Listing Obligations and Disclosure Requirements) norms.
