SEBI Issues Interim Order, Flags Rs 15.15 Lakh Crore Revenue Misstatement by Rajesh Exports Over 5-Year Period

SEBI Passes Interim Order Against Rajesh Exports Ltd. and its Chairman

The Securities and Exchange Board of India (SEBI) has issued an interim ex-parte order against Rajesh Exports Ltd. (REL) and its Chairman and Managing Director, Rajesh Mehta, citing prima facie findings of financial misrepresentation, fund-routing irregularities and non-cooperation during an ongoing investigation.

According to the 109-page order, Whole Time Member Kamlesh Chandra Varshney noted that REL engaged in a multi-year pattern of recording non-genuine transactions, adopting improper accounting treatments, routing corporate funds through personal accounts and promoter-linked entities, and failing to make adequate disclosures to investors.

SEBI alleged that the company's books and financial statements for FY21-FY25 were prima facie manipulated through non-genuine and unverifiable transactions, incorrect consolidation of accounts, unexplained investments, non-disclosure of related-party transactions, and diversion of funds through promoter-linked entities. These actions, the regulator claimed, resulted in misleading financial statements that portrayed an inflated picture of the company's operational scale, balance sheet strength, and financial health.

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Alleged Misrepresentation of Revenues

SEBI alleged that REL misrepresented consolidated revenues aggregating approximately Rs 15.15 lakh crore, representing about 99.8 percent of total consolidated revenue reported during FY21-FY25. This misrepresentation, the regulator claimed, enabled REL to portray an inflated and misleading picture of its operational scale, consolidated financial position, and financial health before investors and the securities market.

SEBI also alleged misrepresentation of standalone revenues amounting to Rs 12,557 crore during FY21-FY24.

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Other Allegations

SEBI alleged that REL falsely recorded derivative transactions executed by Rajesh Mehta in his personal capacity as company sales of Rs 11,487 crore and purchases of Rs 11,488 crore, classified exchange fluctuations of Rs 867 crore and Rs 716 crore as revenue and purchases respectively, and booked Rs 204 crore of interest income from mutual funds and fixed deposits as revenue from operations.

The regulator also alleged that the company falsely claimed an investment in a gold mine in Africa, which could not be corroborated with financial statements available on record.

Action Taken by SEBI

SEBI has restrained Rajesh Mehta from buying, selling, or dealing in Rajesh Exports Limited securities until further orders, and ordered a fresh forensic audit. The regulator has also referred the matter to the National Financial Reporting Authority (NFRA) for examination of the conduct of the company's statutory auditors.

Rajesh Exports has been directed to cooperate and provide the documents and explanations as sought by the Investigating Authority, and make true and fair disclosures of their financial statements, related party transactions, and other disclosures as per SEBI's listing regulations.