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In the interim order, Sebi imposed restrictions on Rajesh Exports and its promoter-chairman Rajesh Mehta pending further investigation, citing concerns over investor protection.
SEBI Cracks Down on Rajesh Exports Over Alleged Rs 15 Lakh Crore Revenue Overstatement
The Securities and Exchange Board of India (Sebi) in its prima facie investigations found that Rajesh Exports Limited (REL), a gold jewellery company, misrepresented its financial statements and created an inflated picture of the group’s scale and financial health.
The regulator has imposed restrictions on Rajesh Exports and its promoter-chairman Rajesh Mehta pending further investigation, citing concerns over investor protection and market integrity.
According to Sebi’s investigations, the company had inflated its revenues to create the illusion of a rising group’s scale and financial health. It stated that approximately Rs 15.15 lakh crore of revenues attributed to subsidiaries during FY21-FY25 appear to have been misrepresented.
Shares of Rajesh Exports Ltd (REL) hit the 5% lower circuit on Thursday after market regulator Securities and Exchange Board of India (Sebi) passed an interim order against the company and its Chairman and Managing Director Rajesh Mehta, alleging large-scale financial misrepresentation, fund-routing irregularities and non-cooperation during an ongoing investigation.
The stock opened at its lower circuit limit of Rs 103.92 on the NSE on June 5, down 4.99% from the previous close of Rs 109.38.
Rajesh Exports’ Failure to Provide Sufficient Records
Rajesh Exports allegedly failed to provide complete books of accounts, ERP access, journal entries and supporting documents. Moreover, forensic auditor could verify only a small portion of the transactions because crucial records were not provided.
Sebi, in its findings, stated that different sales figures were submitted by the company for the same customers and periods. Moreover, the names of several customers and transaction values haven’t been matched across multiple submissions.
Doubtful Subsidiaries
The major loophole in the case of Rajesh Exports came from the subsidiary part. Despite regulatory requirements, the company allegedly didn’t publish audited financial statements of several overseas subsidiaries and step-down subsidiaries.
The vagueness of the subsidiary’s financial statement matters when the company’s consolidated revenue figures, approximately 97 per cent, come largely from overseas subsidiaries, according to Sebi’s findings.
Supporting documents to verify the figures were not provided, the findings revealed.
Rajesh Exports claimed that Swiss subsidiary Valcambi was the main operating entity.
However, Sebi found that Valcambi’s audited standalone revenues were only a tiny fraction of the revenues shown in GGR’s unaudited consolidated accounts. Sebi called this “commercially implausible” and unsupported by records.
About the Author
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the I…Read More
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