| Companies | LMW Limited (formerly Lakshmi Machine Works Ltd), a listed textile-machinery and precision-engineering major, market cap approx. ₹18,600 crore; and Lakshmi Electrical Control Systems Ltd (LECS), a listed control-panel and electrical-components manufacturer, market cap approx. ₹210 crore |
| The approved number | Shareholders of both companies approved a related-party transaction ceiling of up to ₹450 crore between LMW and LECS for FY27, at their respective FY26 AGMs |
| The actual number | LMW's FY26 accounts record purchases from LECS of approx. ₹167.28 crore and sales to LECS of approx. ₹27.10 crore — against LECS's own FY26 revenue of ₹237.58 crore |
| The calculation | ₹167.28 crore ÷ ₹237.58 crore = approx. 70.4%. LMW's purchases from LECS in FY26 were equivalent to roughly seven-tenths of LECS's entire annual revenue |
| The trend | FY25: LMW's purchases from LECS were approx. ₹144.01 crore against LECS's FY25 revenue of ₹212.31 crore — a ratio of approx. 67.8%. The purchase-to-revenue ratio rose year-on-year |
| Individuals & entities involved | Sanjay Jayavarthanavelu, Chairman & Managing Director of LMW and a director of LECS; his son Jaidev Jayavarthanavelu sits on LMW's board; LECS's CEO is a family member and its largest individual shareholder |
| Theme | Approved ceiling versus actual transaction value; purchase-to-revenue concentration; the limits of disclosure as a substitute for analysis |
| Scope | Commentary drawn from LMW's and LECS's own notes to accounts, AGM notices and financial results disclosures. No finding of wrongdoing, unfair pricing or breach of duty is made or implied against either company or any individual named. This article demonstrates a purchase-to-revenue ratio, not pricing unfairness — the two are not the same claim |
This isn't a case of something suspicious hiding in a filing. It's a number nobody reported — because nobody had calculated it. The headline figure in most RPT coverage is the approved ceiling, because it's the biggest number available and it's what makes the news. But the ceiling is a permission slip, not a record of what happened. The number that actually describes the relationship between these two companies sits one layer deeper, in the notes to accounts, and it tells a more specific story than "₹450 crore of related-party transactions" ever could.
The ₹450 crore wasn't the story.
In 2026, shareholders of LMW and Lakshmi Electrical Control Systems separately approved a ₹450 crore ceiling for transactions between the two companies. Reported as a headline, that's the whole story: a large related-party transaction, properly disclosed, properly approved. Read that way, it's forgettable — companies approve RPT ceilings every AGM season.
But a ceiling is an authorisation, not a record. What LMW actually recorded in its FY26 accounts — in the notes to accounts, not the AGM notice — was purchases from LECS of approximately ₹167.28 crore and sales to LECS of approximately ₹27.10 crore. LECS's own FY26 revenue, across all its business, was ₹237.58 crore.
₹167.28 crore ÷ ₹237.58 crore. LMW's purchases from LECS were equivalent to roughly 70% of LECS's entire annual revenue.
That number doesn't appear anywhere in an AGM notice. It has to be built — one figure pulled from LMW's related-party note, another from LECS's own results — and divided. Nobody files it as a ratio. It exists only if a reader chooses to construct it.
Sanjay Jayavarthanavelu is Chairman and Managing Director of LMW and also a director of LECS. His son sits on LMW's board. LECS's Chief Executive is a family member and its largest individual shareholder. Both companies trace back to the same founding promoters, who set up LECS in 1981 specifically to supply control panels to LMW. None of that is hidden. All of it is disclosed, somewhere. The 70% figure is the one thing that isn't — because disclosure obligations require reporting the transaction, not the ratio it implies.
The trend, not just the number
A single year's ratio could be a coincidence of timing — a large order, a one-off contract. The prior year's figures make the pattern harder to dismiss as a one-off. In FY25, LMW's purchases from LECS were approximately ₹144.01 crore, against LECS's FY25 revenue of ₹212.31 crore — a purchase-to-revenue ratio of approximately 67.8%. A year later, the ratio rose to approximately 70.4%. Both the absolute amount and the ratio moved in the same direction.
Put the FY27 ceiling next to the FY26 actual and one more number appears: ₹450 crore ÷ ₹167.28 crore ≈ 2.7×. The approved ceiling for the coming year is nearly three times what actually moved between the two companies in the year just closed. That gap isn't unusual by itself — ceilings are routinely set with headroom. But it raises a question this article can pose and not answer: why does the approved capacity run so far ahead of the demonstrated transaction run-rate, and what does the company expect to change in FY27 to use it?
The economic map
What The Filings Tell Us — And What They Don't
| We Can Establish | We Cannot Establish |
|---|---|
| ₹167.28 cr in LMW purchases from LECS, FY26 | Whether that pricing was fair or at arm's length |
| A ~70.4% purchase-to-revenue ratio, by calculation | Whether that specific share of LECS's revenue originated from LMW |
| A rise from ~67.8% (FY25) to ~70.4% (FY26) | Whether the rise reflects operational integration or LECS's other customers stalling |
| A ₹450 cr FY27 ceiling, ~2.7× the FY26 actual | Why the approved capacity runs that far ahead of the run-rate |
| Common directors and family relationships across both boards | Whether those relationships influenced how the transactions were priced |
The uncomfortable distinction
There are two very different statements. "The transaction was approved" describes a process. "The transaction was priced as it would be with a stranger" describes an outcome. Shareholder approval, audit committee sign-off and disclosure under the LODR Regulations all answer the first question. None of them, on their own, answer the second — and for a related party this size, the second question is the one that actually matters.
Both LMW and LECS describe these transactions in the language SEBI's regulations require: "arm's length," "ordinary course of business." Those labels address the regulatory classification of the transaction; they do not, by themselves, show how the price was determined or whether it was economically favourable to minority shareholders. Nothing in this article suggests the classification is wrong. The point is narrower: correct classification tells a reader that a box was ticked. It doesn't tell them how the price was set, or who had the leverage in the room where it was.
Building the map yourself
Where should a reader actually look, if disclosure alone doesn't answer the question? Start by reconstructing the structure directly from public filings — not the summary, the underlying facts.
The Economic Map
- Who owns what. The promoter group holds ~30.8% of LMW (₹18,600 cr market cap) and ~36.1% of LECS (₹210 cr market cap) — the same family, on both sides, at very different scales.
- Who sits where. Sanjay Jayavarthanavelu chairs LMW and directs LECS; his son sits on LMW's board; LECS's CEO is a family member and its largest individual shareholder.
- Who sells to whom. LECS supplies control panels, plastics and EV chargers largely to LMW; a third entity, LPT, trades with LECS under a separate ₹100 crore ceiling.
- Who earns the margin. LMW's ₹167.28 crore of FY26 purchases equal ~70.4% of LECS's total revenue — demonstrable from the two companies' own disclosures.
- Who approves it. Shareholders of both companies, voting separately at AGMs held weeks apart, on a forward ceiling more than double the actual FY26 figure.
- Who bears the risk. LECS is the much smaller company, making the concentration of the relationship particularly relevant to a minority shareholder.
Every one of those facts is demonstrable from public filings.
A purchase-to-revenue ratio is a fact you can calculate. Pricing fairness is a judgment you cannot reach from disclosure alone.
Conflating the two is where commentary on related-party transactions usually overreaches. This article stops at the first claim on purpose.
A separate development, worth noting briefly
LECS also disclosed GST show-cause notices in FY26 totalling roughly ₹5.49 crore across two years, relating to reverse-charge tax payments and input tax credit reversals — routine tax matters, unrelated to the RPT figures above, and not evidence of anything beyond a disputed assessment. It's noted here only as one more data point in LECS's FY26 picture, not as connected to the purchase-to-revenue ratio in any way this article can demonstrate.
Both RPT approvals stand. The disclosures reviewed for this edition do not identify any regulatory finding on the pricing of these transactions, nor any reported minority-shareholder complaint. This article does not suggest one is coming. It simply demonstrates that LMW's purchases are equivalent to a large and rising share of LECS's revenue — a narrower and more defensible claim than alleging the pricing behind it is unfair.
The question a minority LECS shareholder should ask
Imagine holding LECS stock and running the same division this article just ran: ₹167.28 crore of LMW purchases against ₹237.58 crore of total revenue. The first question isn't whether the RPT resolution passed. It's what evidence exists, beyond the resolution itself, that a company whose purchases from one related counterparty are equivalent to 70% of its revenue is being paid a fair, independently-verifiable price on the other side of that relationship.
If You Were a Minority LECS Shareholder…
Would you ask:
- What share of LECS's revenue and profit comes from LMW, stated as one clear ratio in the annual report rather than left for a shareholder to calculate?
- How is pricing on the LMW relationship benchmarked, and against what independent, non-related comparator?
- Has the purchase-to-revenue ratio been rising for reasons of genuine operational integration, or because LECS's other customers haven't grown at the same pace?
- What would happen to LECS's business if LMW ever chose to insource or find another supplier?
- Does the audit committee apply the same pricing rigor to this counterparty that it would to an unrelated one?
The most useful question a minority shareholder can ask isn't "was this approved?" It's "what would this relationship look like if the counterparty weren't family?" This article can show you the ratio. It cannot show you the answer to that question — only the audit committee, with access to the underlying pricing, can.
What This Pattern Looks Like Elsewhere
- Two or more listed companies under common promoter control, trading substantially with each other.
- A large size gap between the counterparties, with the smaller company's purchases from the larger one running high relative to its own revenue.
- Shared directors or family members occupying leadership roles on both sides of the transaction.
- "Arm's length, ordinary course" language used correctly, but without independent evidence of how pricing was actually set.
- Margin or profitability trends at the smaller company that move in a different direction from its revenue.
Disclosure is not analysis.
Compliance answers whether a rule was followed. It rarely answers whether the outcome was fair to the shareholders who weren't in the room. Related-party rules exist because the ordinary checks on a transaction — negotiation, competing bids, an arm's-length counterparty who can walk away — don't fully apply when the same family sits on both sides. Approval is the floor. It was never meant to be the ceiling on scrutiny.
The real lesson
Gensol asked: did the asset actually exist? IndusInd asked: did the accounting actually reconcile? Zee asked: who was the transaction actually serving? LMW and LECS ask a different question again: does "compliant" mean "understood"?
Four companies, four different failures of imagination in how a reader is expected to interrogate a filing. The most important question was never "was a box ticked?" It was always "what would I need to know, beyond the box, to trust the number inside it?"
Final Footnote
Related-party transactions are not inherently a problem — family-controlled groups often have genuine, longstanding operational reasons to trade with entities they also own or direct. The difficulty is that the safeguards built to catch abuse — negotiation, competing offers, an independent counterparty — are exactly what a shared boardroom and a shared surname tend to soften. None of that makes ₹167.28 crore, or a 70% purchase-to-revenue ratio, wrong. It makes both worth calculating, every time, rather than accepting the approved ceiling as the whole answer.
Every disclosure answers a question.
It doesn't always answer the right one.
Next: Edition 13 opens another file. Same series. Same question. How did nobody see it?
LMW Limited — notes to accounts, FY26 annual accounts, disclosing purchases from and sales to Lakshmi Electrical Control Systems Ltd as a related party · Lakshmi Electrical Control Systems Ltd — FY26 financial results disclosure, total revenue from operations and net profit · LMW Limited and Lakshmi Electrical Control Systems Ltd — AGM notices seeking shareholder approval of a ₹450 crore related-party transaction ceiling for FY27 · Prior-year (FY25) figures drawn from the corresponding related-party notes and results disclosures of both companies · LMW Limited and Lakshmi Electrical Control Systems Ltd — annual reports and director profiles disclosing board composition and family relationships · Public shareholding-pattern disclosures of LMW Limited and Lakshmi Electrical Control Systems Ltd.