The (SEBI) has restrained Rajesh Mehta, promoter and Executive Chairman of, from buying, selling or dealing in the company’s securities after a probe found prima facie evidence of large-scale financial misrepresentation, disclosure failures and diversion of company funds.
The regulator estimated that Rajesh Exports had “prima facie misrepresented approximately INR 15,15,385 crore” of revenue attributable to subsidiaries between FY21 and FY25, representing nearly 99.8 per cent of such revenues attributed to overseas subsidiaries and step-down subsidiaries. “The aforesaid conduct appears to have prima facie 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”, the 109-page order said.
The regulator also found significant inconsistencies between the revenues reported at the consolidated level and the audited financial statements of key operating subsidiary Valcambi SA. They found misrepresentation of standalone revenues amounting to ₹12,557 crore during FY21-FY24.
SEBI has further alleged that REL falsely recorded derivative transactions executed by Rajesh Mehta in his personal capacity as company sales of ₹11,487 crore and purchases of ₹11,488 crore, classified exchange fluctuations of ₹867 crore and ₹716 crore as revenue and purchases respectively, and booked ₹204 crore of interest income from mutual funds and fixed deposits as revenue from operations.
The regulator has directed Rajesh Exports and Mehta to cooperate with the ongoing investigation and has ordered the appointment of a fresh forensic auditor to examine the company’s books. The regulator has also directed the company to make true and fair disclosures to investors and forwarded a copy of the order to the National Financial Reporting Authority for appropriate action.
The action stems from an investigation launched after a shareholder complaint in March 2024 alleging possible financial misrepresentation relating to long-outstanding trade receivables. SEBI’s probe covered the period between April 2020 and March 2024.
The regulator alleged that Rajesh Exports failed to provide critical records to investigators and forensic auditors, including access to its ERP system, books of accounts and transaction-level data. The company also did not furnish financial statements of key overseas subsidiaries and step-down subsidiaries that account for the bulk of its consolidated business, it said.
SEBI also flagged non-cooperation with the investigation, discrepancies in sales data submitted by the company, questionable transactions with certain counter-parties, and routing of company funds through Rajesh Mehta’s personal bank accounts.
The regulator observed that investors may have been presented with an inflated picture of the group’s operational scale and financial position. The interim order will remain in force pending further investigation and proceedings.