SEBI fines LCC Infotech, promoters for misrepresenting financial statements

SEBI on Tuesday imposed fines totalling ₹12 lakh on LCC Infotech and seven associated entities, including its promoters—Chairperson and MD Kirti Lakhotia, CEO Sidharth Lakhotia, and Pratik Lakhotia—for misrepresenting the company’s financial statements.

SEBI issued a ₹6 lakh fine to LCC Infotech, alongside ₹1 lakh penalties each on Kirti Lakhotia, Sidharth Lakhotia, Pratik Lakhotia, and audit committee members Kamaljit Singh, Rajat Sharma, and Mayur P Shah.

In its 39-page order, SEBI found that LCC Infotech had misstated its financial results for FY 2021-22 by omitting provisions for loans, debtors, and investments as per accounting standards. Additionally, SEBI noted the company failed to disclose certain related party transactions in its annual reports for FY 2019-20, FY 2020-21, and FY 2021-22.

The order criticised Kirti Lakhotia for neglecting her duty as MD to ensure transparency in financial reporting and oversee related party disclosures as required by SEBI rules. Sidharth and Pratik Lakhotia were similarly found to have endorsed inaccurate financial statements, providing misleading certifications to the board and undermining accountability.

Audit committee members Singh, Sharma, and Shah were cited for failing to scrutinise key financial elements and oversee significant non-performing assets, revealing a lack of due diligence.

The investigation was initiated after a reference from the NSE highlighted concerns over inflated valuations of LCC’s investments, loans, and trade receivables, representing 94% of the company’s assets for FY 2021-22.

SEBI investigated violations of Listing Obligations and Disclosure Requirements (LODR) for the period April 2021 to March 2022, leading to adjudication against the implicated parties.

(With PTI inputs)