Lalithaa Jewellery faces governance heat as promoter draws Rs 50 Cr brand ambassador fee ahead of IPO
According to the company’s draft red herring prospectus (DRHP) filed with SEBI on June 13, Jain was paid Rs 50.2 crore in FY24 and Rs 9 crore in FY22 for promotional activities.
ADVERTISEMENT
IPO-bound Lalithaa Jewellery Mart is facing corporate governance questions after it emerged that promoter M Kiran Kumar Jain was paid over Rs 50 crore in FY24 for serving as the company’s brand ambassador, a move experts say could signal misaligned incentives, as per a report by Moneycontrol.
According to the company’s draft red herring prospectus (DRHP) filed with SEBI on June 13, Jain was paid Rs 50.2 crore in FY24 and Rs 9 crore in FY22 for promotional activities, accounting for over 60% of the company’s total marketing spend of Rs 82.5 crore last fiscal. In FY22, his brand fee represented 30% of the Rs 29.5 crore spent on advertising and promotion. No such fee was paid in FY23, though Jain received Rs 3.36 crore as director remuneration that year.
The sizable payout has sparked unease among proxy advisors and governance experts, who point out that while promoters often appear in brand campaigns, charging the company separately — without clear benchmarking or third-party valuation — raises red flags.
“Promoters are de facto the face of the company and shouldn’t charge extra to promote the brand,” said Shriram Subramanian, founder of proxy advisory firm InGovern. “Such payments create a conflict of interest and go against the spirit of good corporate governance.”
The company’s DRHP claims that these related-party transactions are conducted on an arm’s length basis and follow commercially reasonable terms, but it also acknowledges that more favourable terms might have been possible if negotiated with unrelated parties.
Lalithaa Jewellery has yet to respond to queries regarding these payments to Moneycontrol.
Notably, Jain stopped receiving brand ambassador fees after FY24. In FY25, he was paid Rs 12 crore as director compensation, as per the draft documents. As the Chennai-based jewellery chain eyes a public listing, these governance concerns could weigh on investor sentiment.
