New Delhi: The market regulator’s interim order against Rajesh Exports has raised fresh questions about the future of the company’s battery manufacturing project under the Centre’s ₹18,100-crore production-linked incentive scheme for advanced chemistry cells (PLI ACC).
In a 109 page ex-parte interim order released on Wednesday evening, the Securities and Exchange Board of India (Sebi) alleged fund diversion, non-transparent related-party arrangements, and disclosure deficiencies involving two entities—Elest Pvt. Ltd and ACC Energy Storage Pvt. Ltd—connected to the company’s lithium-ion cell business.
One of these companies—ACC Energy Storage—is the vehicle through which Rajesh Exports had proposed to execute its battery manufacturing plans under the PLI ACC scheme, according to government documents.
Sebi’s observations formed part of a broader order in which the regulator alleged that about 99.8% of revenue——attributed to the company’s subsidiaries between FY21 and FY25 was materially misrepresented.
The allegations assume significance because Rajesh Exports was selected in March 2022 as one of the beneficiaries of the PLI ACC scheme by the ministry of heavy industries (MHI), under which it committed to establish 5 GWh of local cell manufacturing capacity.
The company has since faced delays in executing the project and was among the beneficiaries penalized last year for missing production timelines.
By the end of 2025, a government disclosure showed that Rajesh Exports had only invested ₹262 crore into the battery business, which is supposed to build 5 GWh of capacity. To put in perspective, Ola Electric’s disclosures to the exchanges showed that the first phase to set up 1.4 GWh of capacity needed about ₹1,200 crore of capital investment.
To be sure, the other two companies that were selected in the PLI ACC scheme—Ola Electric and Reliance Industries—were also issued penalties in March 2025 for missing production timelines, according to a Bloomberg report verified by multiple stock exchange filings. These penalties will be deducted from the incentives that the companies receive, as per scheme guidelines.
However, while Ola Electric in Krishnagiri, Tamil Nadu, and Reliance is building its , Rajesh Exports so far has not revealed its full plans about the plants and whether it is still investing in the business.
Mint’s queries emailed to Rajesh Exports and the ministry of heavy industries did not elicit an immediate response.
In an exchange filing on Thursday, Rajesh Exports pointed out that Sebi’s order was interim and the regulator has not reached an adverse conclusion on any aspect.
“The revenues declared by the company are correct and there is no overstating of revenues,” the statement said, adding that there appeared to be a communication gap and confusion between Sebi and Rajesh Exports.
“The company is in the process of clarifying all aspects to Sebi by submitting all the required and relevant documents,” the statement said.
To be sure, the Sebi order does not directly concern the PLI bidding process or Rajesh Exports’ eligibility under the scheme.
Expert reactions
Experts suggest that the government has the scope to remove firms in case governance concerns are found while they are covered under the scheme.
“When making schemes of PLI scale, the government takes into account any situation where a company faces concerns around governance, sustainability or closures due to an adverse event,” said Abhishek Saxena, a former public policy expert with Niti Aayog, adding that force majeure clauses are built into the agreement to ensure that the overall scheme is protected from any adverse event.
“In the past as well, there have been cases where the government has been able to remove firms due to any concern regarding governance or selection process,” Saxena said.
In March 2022, Hyundai Global Motors was initially selected as a beneficiary under the PLI ACC scheme and was allocated 20 GWh of battery manufacturing capacity.
Soon afterward, Hyundai Motor Co. and its Indian subsidiary clarified to the Centre that Hyundai Global Motors was not affiliated with them in any way and that it was allegedly using Hyundai trademarks, trade names, and logos without authorization, eventually prompting the government to reopen bidding for the 20 GWh capacity.
Industry executives also suggest that there will be questions on the selection of companies and the need for review of how investments are tracked.
“The concerns raised about Rajesh Exports also raise concerns about the scheme’s procedure, especially in light of the previous lapses related to checking the activities of beneficiaries,” a battery industry executive said on the condition of anonymity. “Since the scheme is for building localized cell making capacity, oversight on investments becomes crucial.”
“Sebi’s order against Rajesh Exports raises questions, albeit indirectly, about the governance and execution readiness of its battery manufacturing commitment under the ACC PLI scheme, since ACC Energy Storage Pvt. Ltd, linked to Rajesh Exports, is one of the scheme beneficiaries,” said Alekhya Datta, director, electricity and renewables division, at New Delhi-based think tank The Energy & Resources Institute.
At the same time, he called for better auditing mechanisms and processes to protect the progress of the PLI ACC scheme.
“A practical way forward would be to strengthen the ACC PLI monitoring framework through independent milestone audits, ring-fenced project accounts, stricter related-party transaction disclosure, periodic ownership and control checks, and clear consequences for non-performance or governance breaches,” Datta said.
Sebi’s order
At the centre of Rajesh Exports’ battery business are Elest Pvt. Ltd, incorporated in October 2020, and ACC Energy Storage Pvt. Ltd, which was incorporated in July 2022. While ACC Energy Storage is a subsidiary of Rajesh Exports, Elest is privately owned by the promoter.
Sebi’s order goes into details of alleged non-transparent transactions between the three entities—Rajesh Exports, Elest and ACC Energy Storage.
According to the order, Elest was set up by Rajesh Mehta, co-founder and chairman at Rajesh Exports and Prashant Mehta, co-founder of Rajesh Exports, with the intention of manufacturing lithium ion cells, lithium-ion battery packs and electric vehicles.
While Rajesh Mehta owned 41.2% of Rajesh Exports shares at the end of March quarter, Prashant Mehta’s holdings were about 12.6%, giving the promoter group a majority holding of around 54.55%, including small holdings of other family members.
Between April 2020 and December 2025, about ₹566 crore was transferred by Rajesh Exports to Elest. On its part, Elest transferred ₹350 crore back to Rajesh Exports in the same period, resulting in a net outgo of ₹216 crore from REL to Elest.
“I further note that despite the aforesaid banking transactions, REL disclosed only rental income of ₹12.60 lakh from Elest in its Annual Report for FY 2024-25 and failed to disclose the aforesaid fund transfers as related-party transactions in its Annual Report,” Sebi’s order said.
Also under Sebi’s scrutiny is the surge in valuation of Elest shares between April and July 2021.
In April, Rajesh Mehta acquired 150 million additional shares of Elest at a valuation of ₹10 per share. But within three months, on 2 July 2021, the promoter-owned Rajesh Exports subscribed to 10 million shares of Elest at a valuation of ₹200 per share, a jump of 1,900%.
In November-December 2021, three foreign investors—Geraldton Finance Ltd, Aviator Global Fund and Knightsbridge Ltd—collectively acquired approximately 3.3 million shares of Elest at a valuation of ₹3,000 per share, the order said.
As of 31 March 2024, Rajesh Mehta owned 90% shares of Elest, 6% of shares were owned by Rajesh Exports, and 4% by the three foreign investors.
The series of transactions have drawn Sebi’s attention, with the regulator noting that further examination of these transactions is still ongoing. The order has also pointed that there were no requisite approvals for the related-party transactions.
When Rajesh Exports won the PLI capacity of 5 GWh in 2022, it set up ACC Energy in July to build the manufacturing facility. While ACC Energy was a wholly owned subsidiary of Rajesh Exports, its shareholding shrank to 51% in 2025, as Elest acquired 49% shares in the company.
“I also note that preliminary analysis of available bank statements of Elest and ACC Energy revealed transfer of ₹147 crore from Elest to ACC Energy, out of which ACC Energy transferred back ₹112 crore to Elest on the same date,” the Sebi order said.
Moreover, according to the order, Rajesh Exports’ disclosure in FY25 said that ACC Energy invested ₹262 crore in Elest during the fiscal year.
“However, the details relating to valuation, percentage stake acquired and underlying terms of such investment were not available on record,” the order said, adding that Rajesh Exports’ managing director and chief financial officer were unaware of the transactions between Elest and ACC.
“I further prima facie find that routing and utilization of company funds through opaque and inadequately disclosed arrangements involving promoter-controlled entities constitutes a device, scheme and artifice to mislead investors and amounts to fraudulent and unfair trade practice in the securities market,” the order added.
Potential implications for the scheme
While Sebi’s order does not directly relate to Rajesh Exports’ eligibility under the PLI scheme, governance and disclosure issues relating to entities involved in the battery project could draw greater attention to the company’s progress and compliance with scheme conditions.
Under the 2021 PLI ACC scheme, beneficiaries are required to meet a range of eligibility, performance and reporting requirements. The scheme’s request for proposal (RFP) also provides for penalties and other action if a bidder is found to have misrepresented facts during the bidding process.
Under the 2021 PLI ACC scheme, the government also has criteria for allowing bids, as well as for action against beneficiaries if they are found to have misrepresented facts during bidding.
As per the RFP for inviting bidders under the scheme, the government has noted that the bidder must have a net worth of ₹225 crore per GWh of capacity that it is bidding for.
The document further states that any bidder found to have misrepresented facts during bidding could forfeit its bid and performance securities and be barred from participating in government tenders for two years.