Rajesh Exports Shares Plummet 5% on Second Consecutive Trading Day Following Sebi Enforcement Order

Rajesh Exports Ltd Shares Plummet as Sebi Bars CEO from Dealing in Securities

Shares of gems and jewellery firm Rajesh Exports Ltd (REL) took a hit on June 5, falling 5% for the second consecutive day and hitting the lower circuit limit. The stock dropped to Rs 98.73 on the National Stock Exchange (NSE) and Rs 99.45 on the BSE, with a market valuation decline to Rs 1,334 crore.

The decline comes after the Securities and Exchange Board of India (Sebi) issued an interim order on Wednesday, barring Rajesh Mehta, the company's promoter and CEO, from dealing in the company's securities. Sebi alleged large-scale misrepresentation of financial statements and diversion of funds by the company.

According to the 109-page interim order, Sebi's investigation revealed misrepresentation in financial statements, including instances of routing and layering of funds through personal accounts and related entities without adequate disclosures or supporting documentation. The regulator also flagged non-cooperation by REL's statutory auditors, who failed to provide audit working papers as promised.

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Sebi noted that approximately 97-99% of REL's revenue was inflated, which is unprecedented. The regulator observed that Rajesh Mehta was the key decision-making authority within REL and exercised substantial control over the day-to-day affairs and financial operations of the company and its subsidiaries.

As a result, Sebi restrained Rajesh Mehta from buying, selling, or dealing in securities of REL, either directly or indirectly, until further orders.

REL has denied the allegations, stating that its reported revenues were correct and that there seemed to be a communication gap between Sebi and the firm. The company is in the process of clarifying all aspects to Sebi by submitting all the required and relevant documents.

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The Sebi's order is interim, and there has been no adverse conclusion on any aspect. REL is confident that Sebi will clarify the situation and arrive at the correct conclusion based on the authenticated documents, which the company is in the process of submitting.