Sebi flags alleged 97-99% revenue inflation at Rajesh Exports, bars promoter from trading

New Delhi, June 24: The Enforcement Directorate (ED) on Wednesday alleged that gold refining and jewellery manufacturing company Rajesh Exports' key business indicators showed "significant" departures from normal commercial practices, in addition to the non-availability of records related to foreign transactions.The federal agency issued a statement after conducting searches against the Bengaluru-based company and persons linked to it on June 23 for suspected contravention of the Foreign Exchange Management Act (FEMA).The ED identified at least five issues against Rajesh Exports Ltd (REL) and recovered various "incriminating" documents and digital devices during the searches.The company has not yet responded to a PTI query regarding the ED action. The stock exchanges have also sought clarification from the company.Company Denies WrongdoingFounder and Chairman of the company, Rajesh Mehta, denied any fund diversion or wrongdoing during a recent interview with PTI. He had said that the company will fully cooperate with the fresh forensic audit ordered by the SEBI and not challenge the market regulator's interim order against it.According to the ED, Rajesh Exports "failed" to produce documentation regarding its foreign transactions, including its imports, exports, overseas investments and the settlement of foreign trade receivables and payables, which rendered verification of the genuineness of such transactions almost impossible."For example, contemporaneous records and documentation of the claimed investment of Rs 1,035 crore into African mines were neither found nor provided by the company as yet," it said.The agency claimed that the company's "key business indicators" showed "significant" departures from normal commercial practices.ED Flags Multiple IrregularitiesFor instance, it said, the remuneration paid to senior management was "unusually low" compared to the scale of the company's operations.The chief financial officer (CFO) has not received any salary since 2020, while the managing director was paid only about Rs 17,000 per month, despite the company reporting consolidated revenue of approximately Rs 7.7 lakh crore, the agency found.It said the probe found "suspicious" block trades in the REL scrip executed by certain individuals whose names also appear in leaks released by the International Consortium of Investigative Journalists (ICIJ), indicating possible undisclosed offshore links that are under examination."Over Rs 600 crore were siphoned out of India through share manipulation using NRI benamidars," the ED alleged.A benamidar is a person or entity in whose name a benami asset is transferred.The ED also said in the statement that the company was found to be engaged in setting off trade payables and trade receivables from suspicious foreign parties based in the UAE and other overseas jurisdictions.It added that a physical verification of stock carried out during the search revealed a "difference" of about 40 per cent between the stock recorded in the factory registers and the actual goods found at the premises.Also Watch: Rajesh Exports Audit Under Scrutiny Over Rs 15 Lakh Crore MisreportingSEBI Allegations Under ScrutinyThe action by the central agency came against the backdrop of the SEBI's allegation of a massive financial fraud in Rajesh Exports.The market regulator recently alleged that the company had a suspected consolidated revenue inflation of up to Rs 15.15 lakh crore for the 2020-21 to 2024-25 fiscal years.(Disclaimer: Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)

The Enforcement Directorate on Tuesday conducted searches against Rajesh Exports which is facing scrutiny from market regulator Sebi over alleged financial irregularities, official sources said. The action is understood to have been taken under the Foreign Exchange Management Act (FEMA) at the Bengaluru-headquartered company. Premises in Bengaluru and Mumbai linked to the company are being covered, they said.Also read: Inside Sebi's Rs 15.15 lakh crore revenue inflation allegations against Rajesh Exports Rajesh Exports Ltd allegedly inflated its consolidated revenues by more than Rs 15 lakh crore over five years by attributing massive revenues to overseas subsidiaries, particularly Switzerland-based Valcambi SA, despite the subsidiary's audited standalone financial statements showing only a fraction of those amounts, according to an interim order by Sebi. The regulator has restrained the company's Chairman and Managing Director, Rajesh Mehta, from buying, selling or dealing in securities of Rajesh Exports, either directly or indirectly, until further orders. Rajesh Exports has denied any financial irregularities, saying its reported revenues were correct and that there seemed to be a communication gap between the markets regulator and the firm.

Shares of Rajesh Exports extended their sharp recovery on Friday, hitting the 5% upper circuit at Rs 97.51. With this move, the stock has gained nearly 28% over the past five trading sessions, signalling a strong rebound after its recent steep decline.The recovery comes after a sharp selloff that pushed the stock to a 52-week low of Rs 77.05 last week. The decline followed a seven-session losing streak triggered by an interim order issued by the Securities and Exchange Board of India (SEBI) on June 3.In its order, SEBI barred Rajesh Exports and its founder-chairman Rajesh Mehta from accessing the securities market pending further investigation. The regulator also alleged that the company had overstated its revenue by approximately Rs 15.15 lakh crore during the financial years FY21 to FY25.SEBI further raised concerns about the financial reporting of the company’s overseas subsidiaries, particularly Switzerland-based Valcambi SA. According to the regulator, a large portion of Rajesh Exports’ consolidated revenue—between 97% and 99% during the review period—came from its international subsidiaries, and some of this reporting was allegedly misrepresented.Rajesh Exports: SEBI Has All The Powers But Where Is The Accountability? Despite the allegations, Rajesh Exports has strongly rejected any wrongdoing. In a detailed clarification issued after the SEBI order, the company stated that the findings were preliminary in nature and not conclusive. It reiterated that its financial statements and revenue disclosures are accurate and properly reported.The company also said it is actively responding to SEBI’s concerns with appropriate documentation and explanations. Stock Of Rajesh Exports Hits 5% Upper Circuit After Sharp Sebi-Linked Selloff Additionally, it clarified discrepancies in reported financial figures across exchange filings, stating that these differences arise from distinct reporting parameters such as voting-eligible shares, actual votes cast, and paid-up share capital classifications. According to the company, these variations do not indicate any irregularity.Despite regulatory overhang, investor sentiment has improved in the short term, driving a strong technical rebound in the stock after the recent sharp correction.

The shares of Rajesh Exports took a breather after an incessant fall, rising 5% to hit the upper circuit on Monday after Sebi’s interim order over alleged Rs 15.15 lakh crore revenue inflation sparked a 30% crash in the stock over seven consecutive sessions.The shares of the company jumped to Rs 80.23 apiece on the NSE amid the overall market uptrend. The stock has overall tumbled 55% in 2026 so far and 87% in three years, with its market capitalisation coming down to Rs 2,369 crore.Sebi’s interim order against Rajesh ExportsSebi, in its interim order released earlier this month, claimed that its investigation and forensic review had uncovered prima facie evidence suggesting that about 97-99% of the company's revenue may have been inflated, describing the findings as "egregious and unheard of."The market regulator restrained promoter Rajesh Mehta from buying, selling or dealing in securities of Rajesh Exports until further orders, and also directed the company to cooperate fully with investigators. This came after a shareholder complaint received in March 2024.Also read: Canara Bank recovers over half of ₹500 crore Rajesh Exports exposure, CEO outlines growth strategyRajesh Exports blames ‘communication gap and confusion’Rajesh Exports, in an exchange filing, clarified that the order is interim and no adverse conclusion has been made by Sebi yet. It said that the revenues declared by the company are correct, and no overstating of earnings has been done. “There seems to be some type of communication gap and confusion between Sebi and the company,” Rajesh Exports said.The company further said that it is confident that Sebi, in its wisdom, will clarify the situation and arrive at the correct conclusion, based on the authenticated documents which are in the process of submission by the company.“The core observation in the order is concerning the misreporting of the revenues. This has emerged primarily due to confusion because SEBI has considered the Ebitda of Valcambi instead of Revenue; hence, it has stated that there is a difference of about 97% in the revenue. The consolidated Revenue as stated by the Company is correct,” Rajesh Exports said in another exchange filing.Also read: Rajesh Exports is not alone; there are many hiding behind one word called …Promoter Rajesh Mehta denies allegationsIn an interview with PTI, the company’s founder and chairman, Rajesh Mehta, denied allegations that Rajesh Exports had impeded the audit process and said the company had been forthcoming with investigators throughout."I would never agree to the fact that certain relevant documents have not been submitted by us. We have submitted everything we were asked for. Sebi has not found anything; maybe we have missed out on something. All that will be reconciled now," Mehta said.On whether the company plans to legally contest Sebi's directions, Mehta said there was no reason to do so. "Sebi has all the authority and right to keep asking us for documents for any number of years. There is no fine, no penalty, no coercive action in this order. Why should we challenge it?" he said.Also read: Why is the stock market rising today?(With inputs from agencies)(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)

Shares of Rajesh Exports Ltd staged a sharp recovery in morning trade on Monday, hitting the 5% upper circuit at Rs 80.23, after enduring a seven-session losing streak that wiped out nearly 30% of its market value. The rebound came after a steep selloff that pushed the stock to a 52-week low of Rs 77.05 on Friday.The decline was triggered by an interim order from the Securities and Exchange Board of India (Sebi), which barred Rajesh Exports and its founder-chairman Rajesh Mehta from accessing the securities market pending further investigation.In its June 3 interim order, Sebi alleged that the company had overstated its revenue by approximately Rs 15.15 lakh crore between FY21 and FY25. The regulator also raised concerns over financial disclosures related to the company’s overseas subsidiaries, stating that nearly 97–99% of Rajesh Exports’ consolidated revenue was generated through entities abroad, particularly Switzerland-based Valcambi SA.Following the order, the stock witnessed heavy selling pressure, extending losses for seven consecutive trading sessions.Rajesh Exports Under SEBI Scanner, ₹15.15 Lakh Crore Revenue Records Questioned As Market Value Drops Below ₹2,800 CroreRajesh Exports Stock Hits Lower Circuit For Third Straight Session In response, Rajesh Exports issued a detailed clarification rejecting all allegations of wrongdoing. The company said its reported revenues and financial statements are accurate and in compliance with regulations. It further stated that the Sebi order is only interim in nature and based on preliminary observations, and that it is actively working to address the concerns raised with supporting documents and explanations.The company also pointed out that variations in reported figures across disclosures do not indicate inconsistencies, as they correspond to different reporting parameters such as voting-eligible shares, votes cast, and paid-up capital classifications.Despite Monday’s recovery, the stock continues to trade significantly below pre-order levels, reflecting ongoing investor caution amid regulatory scrutiny and uncertainty over the final outcome of the Sebi investigation.

Shares of Rajesh Exports (REL) tumbled 5% to hit the lower circuit at Rs 94.50 on Monday, marking the third consecutive session of sharp losses after market regulator Sebi accused the company of orchestrating an elaborate financial fraud involving alleged revenue inflation of Rs 15.15 lakh crore over the years, personal gold trades purportedly passed off as corporate sales, and investments of Rs 1,035 crore in gold mines.In its findings, Sebi alleged accounting irregularities, diversion of company funds into personal accounts, and a pattern of conduct aimed at misleading investors. The regulator also flagged lapses by the company's auditors and said both Rajesh Exports and its auditors failed to fully cooperate with the investigation.In its 109-page interim order dated June 3, Sebi said its investigation and forensic examination revealed prima facie evidence suggesting that nearly 97-99% of the company's reported revenue may have been inflated. The regulator described the alleged discrepancies as "egregious and unheard of".Pending further directions, Sebi has barred Rajesh Mehta from buying, selling or otherwise dealing in securities of Rajesh Exports. The regulator has also directed the company to fully cooperate with investigators and ensure true and fair disclosure of its financial statements and related-party transactions."The acts of REL constitute a deliberate device, scheme and artifice to mislead and defraud investors dealing in the shares of REL by portraying an inflated and misleading picture of its operational scale, revenue and financial health," Sebi said in its order.The case stems from a shareholder complaint received in March 2024 that raised concerns over substantial trade receivables reflected in the company's accounts. Following a preliminary review, Sebi initiated a detailed investigation covering the period from April 2020 to March 2024 and appointed BDO India Services as the forensic auditor.Besides restricting Rajesh Mehta from dealing in the company's securities, Sebi has directed Rajesh Exports to furnish all pending information sought by investigators within 30 days. The regulator has also ordered the appointment of a new forensic auditor to conduct a more comprehensive review of the company's books and transactions.Rajesh Exports has denied the allegations. In a press release issued on Thursday, the company said the revenues reported in its financial statements were accurate and contended that Sebi's conclusions were based on a misunderstanding between revenue and EBITDA figures at Swiss refiner Valcambi SA, an indirect subsidiary of the company.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)