Mumbai, Oct 9
Governance advisory firm InGovern Research Services has raised several red flags for investors in LG Electronics India Limited’s initial public offering (IPO), warning that the company’s contingent liabilities, royalty payment structure, and related-party transactions could pose significant risks.
According to InGovern, LG Electronics India has disclosed contingent liabilities worth Rs 4,717 crore -- equivalent to nearly 73 per cent of its net worth -- mainly due to disputed tax claims under litigation.
InGovern also pointed out that LG Electronics India faces a contingent liability of Rs 315 crore related to royalty payments to its promoter, warning that such issues could attract further scrutiny from tax authorities in South Korea.
The company is debt-free and has maintained healthy profitability ratios, with revenue growing at an annual rate of 10.9 per cent over recent years