Rajesh Exports Ltd. (REL) is facing serious regulatory scrutiny after the Securities and Exchange Board of India (SEBI) issued an interim ex-parte order citing alleged financial irregularities, governance failures and disclosure violations spanning multiple financial years.
According to SEBI's preliminary findings, the company may have significantly overstated its financial performance between FY2020-21 and FY2024-25. The regulator has alleged that REL reported approximately ₹15.15 lakh crore of consolidated revenue that could not be adequately substantiated, representing nearly the entirety of the revenue attributed to its overseas subsidiaries during the period under review.
A key area of concern relates to revenue reported by foreign subsidiaries, particularly Swiss refining business Valcambi SA. SEBI noted apparent discrepancies between revenues reflected in the group's consolidated accounts and those disclosed in the subsidiary's standalone audited financial statements. The regulator has questioned the accounting treatment adopted by the company and stated that supporting records, transaction details and documentation were insufficient to validate the reported figures.
The interim order also highlights alleged issues involving the recording of transactions that were either unverifiable or incorrectly classified. These include derivative trades reportedly undertaken in a promoter's personal capacity but reflected in company accounts, exchange fluctuation entries treated as operational revenue, and interest income being booked under revenue from operations.
SEBI further raised concerns over investments disclosed by the company, including claims relating to a gold mining investment in Africa that, according to the regulator, could not be independently corroborated through available records.
Another major allegation relates to the movement of company funds through personal bank accounts linked to promoters. SEBI stated that these transactions were allegedly carried out without appropriate approvals and were not disclosed as related-party transactions, raising concerns over transparency and corporate governance practices.
The regulator also observed that the investigation faced delays due to incomplete submissions and inconsistent information provided by the company at various stages. As a result, SEBI has directed the appointment of a new forensic auditor after concluding that the earlier audit process was not supported with full cooperation.
In addition, the matter has been referred to the National Financial Reporting Authority (NFRA) for examination of the conduct of the company's statutory auditors.
As part of the interim directions, SEBI has barred Chairman and Managing Director Rajesh Mehta from dealing in the company's securities until further orders. The company has also been instructed to fully cooperate with the ongoing investigation and ensure accurate disclosures relating to financial statements, related-party transactions and other regulatory filings.
Rajesh Mehta has rejected the allegations, stating that the findings contained in the interim order are incorrect. He said the company is reviewing the order and will submit its response to the regulator.
