SEBI bars Rajesh Exports promoter from securities market, alleges ₹15 lakh crore revenue gap

Market regulator Securities and Exchange Board of India (SEBI) has passed an interim ex-parte order against Rajesh Exports Ltd

(REL) and its Chairman and Managing Director Rajesh Mehta, citing prima facie findings of large-scale financial misrepresentation, fund routing irregularities, and non-cooperation during an ongoing investigation covering FY21 to FY25.

In a 109-page order passed by Whole Time Member Kamlesh Chandra Varshney, SEBI observed that REL allegedly misrepresented consolidated revenues aggregating to approximately ₹15.15 lakh crore, which it said represented 99.80% of the company’s total consolidated revenue during the period FY21–FY25.

The regulator noted a pattern of what it described as non-genuine transactions, improper accounting treatments, routing of corporate funds through personal and promoter-linked accounts, and inadequate disclosures to investors.

SEBI, in its order, stated, “REL has prima facie misrepresented approximately ₹15,15,385 crore i.e. representing 99.80% of its revenues which are attributed to subsidiaries during the period FY 2020-21 to FY 2024-25. 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 forensic audit findings cited in the order also highlighted what SEBI termed a “systematic failure” to substantiate financial figures through transaction testing. Out of a selected sample of ₹7,021.36 crore, the company reportedly provided complete documentation for only 2.03% of the sample value. In another test involving sales samples worth ₹12,217.15 crore, only 35.07% could be verified with complete documentation.

The regulator further recorded instances where REL allegedly failed to provide key financial statements of subsidiaries and step-down subsidiaries, including entities such as REL Singapore, Bab Al Rayan Jewellery LLC, GGR, Valcambi SA, Valcambi USA Inc, and ACC Energy, spanning FY20–FY25 in various forms.

It also noted missing transactional records such as customer-wise sales registers, vendor-wise purchase registers, debtor and creditor breakups, and related-party transaction details.

According to SEBI, the company’s books and financial statements for FY21–FY25 were prima facie manipulated through non-genuine and unverifiable transactions, incorrect consolidation of accounts, unexplained investments, non-disclosure of related-party transactions, and alleged diversion of funds through promoter-linked entities.

The order further stated 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. It also alleged misclassification of exchange fluctuations of ₹867 crore and ₹716 crore as revenue and purchases respectively, along with booking ₹204 crore interest income from mutual funds and fixed deposits as revenue from operations.

SEBI also flagged an unverified claim regarding “Other Non-Current Investments” being represented as “investment in gold mines in Africa”, stating, “It is observed that the claim made by REL that ‘Other Non-Current Investments’ represented ‘investment in gold mines in Africa’ could not be corroborated with financial statements available on record”.

The regulator further alleged that company funds were routed through personal bank accounts of Rajesh Mehta and Siddharth Mehta without proper disclosure as related-party transactions or approval from the board and audit committee.

SEBI also said the company hampered the investigation by failing to provide consolidated-level information and submitting inconsistent standalone-level data at different stages. It observed, “REL has ‘Hampered SEBI’s investigation by failing to provide consolidated-level information and furnishing varying and inconsistent submissions w.r.t. standalone-level information, at different stages of the investigation’”.

The order added that publishing such financial statements resulted in a misleading disclosure to investors. It stated, “By publishing such misrepresented financial results and annual financial statements containing prima facie non-genuine and unsupported transactions, REL failed to ensure accuracy, completeness and transparency in its disclosures to stock exchanges and investors”.

SEBI has also referred the matter to the National Financial Reporting Authority (NFRA) for examination of the conduct of the company’s statutory auditors, citing prima facie dereliction of duties.

Rajesh Mehta has been restrained from buying, selling, or dealing in Rajesh Exports securities until further orders, and SEBI has directed the company to cooperate with the ongoing investigation and provide all required documents and explanations. A fresh forensic audit has also been ordered.