Rajesh Exports Faces Potential Ouster from PLI Scheme by Heavy Industries Ministry

Rajesh Exports Faces Possible Removal from PLI Scheme Amid SEBI Allegations

The Ministry of Heavy Industries (MHI) is poised to make a decision on whether to remove Rajesh Exports from its production-linked incentive (PLI) scheme for advanced chemistry cell (ACC) battery storage, following a severe interim order issued by the Securities and Exchange Board of India (SEBI). The regulator has alleged massive financial fraud at the Bengaluru-based corporation, with a "strong view" within the department favoring the immediate disqualification of the firm.

The final decision will soon be placed before Heavy Industries Minister HD Kumaraswamy, who has just returned from an official visit to Kyrgyzstan. According to a source, "A final call will be taken in the coming days." This development comes after SEBI issued a comprehensive 109-page ex parte interim order dated June 3, alleging that Rajesh Exports fabricated a staggering ₹15.15 lakh crore in revenues between FY21 and FY25. This means approximately 99.8% of the revenues attributed to its subsidiaries during this timeframe were materially misrepresented.

The market regulator has also flagged illegal fund diversion, opaque related-party dealings, and severe disclosure failures tied directly to Elest Pvt Ltd and ACC Energy Storage Pvt Ltd, two entities central to the company's lithium-ion cell venture. Consequently, SEBI has barred Rajesh Exports' promoter and Chairman, Rajesh Mehta, from buying, selling, or dealing in the company's securities until further notice, while simultaneously ordering a fresh forensic audit of the corporate books.

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As the primary administrator of the battery storage PLI program, the MHI is closely scrutinizing the regulator's findings to map out its next legal steps. Meanwhile, Mehta and Rajesh Exports have firmly denied SEBI's allegations and maintained that they are fully cooperating with the ongoing investigation. The company has provided 400 GB of documentation to SEBI, which it believes contains the necessary information to clarify the situation.

However, the company's founder and chairman, Rajesh Mehta, has asserted that SEBI's June 3 interim order stems from a fundamental accounting miscalculation. Mehta claimed that the regulator mistakenly extracted the company's EBITDA figures and misclassified them as total top-line revenue.

Comparison of Revenue Figures

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Mehta used a retail jewelry store analogy to illustrate the alleged oversight, explaining that in a high-volume, low-margin operation like Rajesh Exports' gold bullion enterprise, a customer purchasing 2 grams of gold for ₹30,000 generates ₹30,000 in revenue. From that transaction, the gross profit might be ₹1,000 and the net profit ₹500. Mehta argued that SEBI erroneously recorded the ₹1,000 gross profit as the base revenue figure instead of the full ₹30,000 invoice amount. Applying this rationale to the broader corporate scale, he noted that the company routinely buys gold for ₹100 and sells it for ₹101, yielding a gross profit of Re 1; it is this single rupee, Mehta alleges, that SEBI misconstrued as the actual revenue rather than the true ₹101 sales turnover.