A series of investments by three Mauritius funds boosted the valuation of Rajesh Mehta-owned Elest Pvt. Ltd to ₹50,000 crore in a short span of three years, even as the private company behind the battery venture of the billionaire’s Rajesh Exports reports no operating revenue. Moreover, while two of the three funds share the same office address in Mauritius, executives of the same valuation firm valued Elest in different years.
An investment of ₹1,250 crore by the three funds over three years explains the steep valuation of Elest, a company that has no operations but has agreed to supply land, machinery and technology for ACC Energy Storage Pvt. Ltd, the battery business of publicly listed Rajesh Exports. The transactions have drawn the attention of the Securities and Exchange Board of India (Sebi), which said an interim order last week that over 98% of ‘ revenue cannot be independently verified.
On Tuesday, Mint that the Centre will decide on removing Rajesh Exports from the ₹18,100 crore production-linked incentive scheme for advanced chemistry cells later this week. Elest and Rajesh Exports have worked under a unique structure: Elest would lease land and technology to ACC Energy, a subsidiary of Rajesh Exports; after 30 years, ACC would return the land and technology to Elest, while Elest would return the investment made by Rajesh Exports-owned ACC.
What lies beneath
At the heart of Elest’s valuation lies three Mauritius funds—Geraldton Finance Ltd, Aviator Global Investment Fund and Knightsbridge Ltd. Curiously, Geraldton and Knightsbridge shared the same address and contact email, though they invested separately. The funds invested between 2021 and 2024 to notch up about 4% stake, valuing Elest at nearly ₹50,000 crore at the end of February 2024, statutory filings by Elest and ACC showed.
Founded in October 2020, Elest received its first major cash infusion of ₹150 crore from promoter Mehta at ₹10 per share. The share price surged 1,900% to ₹200 in July 2021, when listed Rajesh Exports infused ₹200 crore into the company.
How did Rajesh Exports reach this valuation for Mehta’s private company? The answer: A valuation report from Kolkata-based Finshore Management Services Ltd, which pegged a ₹200 share price and an equity valuation of ₹3,000 crore. Just four months later, in November 2021, Geraldton Finance invested ₹198 crore in Elest at ₹1,000 a share—a valuation jump of five times—and brought in another ₹70 crore at the same valuation in December. Mint could not establish the rationale for Geraldton’s valuation.
That was not all. Aviator Global Investment Fund and Knightsbridge brought in ₹140 crore in February 2022, valuing Elest at ₹3,000 a share. Behind that valuation was another report from Finshore, which valued the battery business at ₹36,000 crore.
Mint’s queries to Finshore went unanswered.
Over the next 24 months, the three funds invested more, with the last infusion by Geraldton in February 2024 valuing Elest at ₹49,792 crore. Elest’s equity valuation ballooned over 1470% to nearly ₹50,000 crore between July 2021 and February 2024, even though it had no revenue from operations, as the battery plant had not yet begun operations. At the end of March 2024, Rajesh Mehta owned 90% in Elest, Rajesh Exports 6% and the three foreign funds 4%.
Scrutiny
“The sharp appreciation in the valuation of the privately owned entity within a relatively short period is likely to invite scrutiny on whether value that could otherwise have been created within the listed company was instead concentrated in promoter-controlled vehicles,” Sonam Chandwani, managing partner, KS Legal & Associates, said. “Regulators generally examine such structures through the prism of transparency, disclosure obligations, conflict of interest and the fiduciary responsibilities owed by promoters and directors to minority shareholders,” she added.
Geraldton Finance and Aviator Global did not respond to queries. Sebi has said it is verifying the transactions with foreign entities in detail.
“The investment manager is aware of the Sebi interim order and continuously monitors developments that might impact portfolio investments. However, the investment manager does not disclose information concerning its investment processes,” Knightsbridge said in an email response to a Mint query.
‘Change the world’
Elest will one day be “one of the biggest companies in the world”, Mehta told Mint at his ground-floor office of a commercial building in Bengaluru, a short walk from the state chief minister’s residence.
“Nvidia is over $1 trillion market cap. What we are working on, ₹49,000 crore (valuation), is nothing,” said Mehta. “We are coming out with a cell which will change the way the world looks at energy storage”.
“I am an authority in advanced chemistry cell today,” said Mehta, who did not pursue college. “We have solid research of more than eight years”.
“I have to guide my six scientists,” said Mehta, as he pointed his index finger to his left temple. Mehta declined to name any employees, as he fears they could be poached. Mint could not find any details of any employee at Elest.
Who owns the three Mauritius funds?
“No idea. These are public funds that have taken a stake… How can they be related to me?” said Mehta.
Enter PLI and Rajesh Exports
As the three foreign investors were pumping money into Elest, Rajesh Exports was selected as one of the winners for building 5GWh of lithium-ion battery capacity under PLI scheme. Alongside Rajesh Exports, Ola Electric and Reliance Industries were also selected to build the battery business. To set up the battery business under the listed Rajesh Exports, a subsidiary, ACC Energy, was established, with 100% of its shares owned by the listed entity. While ACC was housed under Rajesh Exports, it lacked its own land or technology to build the battery plant. Instead, it was leased from Elest.
“Where critical assets such as land and technology are housed in privately held entities controlled by the promoter, while the operating business is carried out through a listed company, concerns may arise regarding related party structures, transfer of economic value and whether the benefits accruing from the growth of the business are being shared equitably with public shareholders,” Chandwani noted.