MUMBAI — India’s market regulator SEBI on Wednesday passed an interim ex-parte order against Rajesh Exports Ltd. and its chairman and managing director, Rajesh Mehta, alleging large-scale financial misrepresentation, fund-routing irregularities and corporate governance failures.
In a 109-page interim order, SEBI Whole Time Member Kamlesh Chandra Varshney said the regulator had prima facie found evidence of a multi-year pattern involving non-genuine transactions, improper accounting practices, diversion of company funds through promoter-linked entities and inadequate disclosures to investors.
SEBI alleged that Rajesh Exports misrepresented consolidated revenue totaling about Rs 15.15 lakh crore between FY2020-21 and FY2024-25. The regulator said the amount accounted for nearly 99.8 percent of the company’s total reported consolidated revenue during the period.
According to the order, the company’s financial statements and books of accounts for FY21 to FY25 appeared to have been manipulated through non-genuine and unverifiable transactions, incorrect consolidation of accounts, unexplained investments, undisclosed related-party transactions and routing of funds through entities linked to promoters.
SEBI said the actions created a misleading picture of the company’s operational scale, financial position and overall business health for investors and the securities market.
The regulator also alleged that Rajesh Exports misrepresented standalone revenue worth Rs 12,557 crore during FY21 to FY24.
SEBI said derivative transactions undertaken by Rajesh Mehta in his personal capacity were recorded as company sales and purchases amounting to more than Rs 11,400 crore each.
The order also alleged that exchange fluctuation gains and losses amounting to hundreds of crores of rupees were incorrectly classified as revenue and purchases, while interest income from mutual funds and fixed deposits was booked as revenue from operations.
SEBI also questioned the company’s claim about investments in gold mines in Africa. The regulator said it could not corroborate disclosures made by the company regarding “Other Non-Current Investments” that allegedly represented investments in African gold mines.
The market regulator also raised concerns over the routing of company funds through the personal bank accounts of Rajesh Mehta and Siddharth Mehta.
According to SEBI, the transactions were not disclosed as related-party dealings and lacked approval from the board of directors and audit committee.
“I prima facie find that the pattern of routing substantial sums through the personal bank accounts of Mr. Rajesh Mehta and Siddharth Mehta, coupled with absence of approvals, non-disclosure and inconsistent explanations, demonstrates systemic failure of corporate governance, concealment of material information and deliberate circumvention of regulatory requirements,” Varshney said in the order. (Source: IANS)
