SEBI Alleges ₹15.15 Lakh Crore Revenue Misstatement by Rajesh Exports; Orders Fresh Forensic Audit

India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), has initiated strong interim action against Rajesh Exports Ltd. (REL) and its Chairman and Managing Director Rajesh Mehta, following preliminary findings of alleged financial irregularities, disclosure lapses, and lack of cooperation during an ongoing investigation.

In an interim ex-parte order issued by SEBI, the regulator observed that the company may have significantly overstated its consolidated revenue figures over a five-year period. According to SEBI's findings, Rajesh Exports allegedly reported revenues amounting to nearly ₹15.15 lakh crore between FY 2020-21 and FY 2024-25, representing approximately 99.80% of its total consolidated revenue during the period under review.

The regulator further noted that the matter raises serious concerns regarding the authenticity of reported financial information and the transparency of disclosures made to shareholders and the broader investing public.

Fresh Forensic Audit Ordered

Given the seriousness of the allegations, SEBI has directed the appointment of a new forensic auditor to conduct an independent examination of the company’s books of accounts, financial records, and related transactions. The decision was taken after the regulator concluded that an earlier forensic review could not be effectively completed due to what it described as insufficient cooperation from the concerned parties.

The fresh audit is expected to provide greater clarity on the nature and extent of the alleged irregularities and assess whether investors were misled through inaccurate financial reporting.

Allegations Highlighted by SEBI

In the detailed 109-page interim order, SEBI Whole-Time Member Kamlesh Chandra Varshney outlined several preliminary observations against the company. The regulator alleged that Rajesh Exports may have engaged in a prolonged pattern of questionable accounting and financial practices.

Among the key concerns identified were:

• Recording of transactions that appeared to lack genuine commercial substance.
• Use of accounting treatments that may not have reflected the true financial position of the company.
• Movement of corporate funds through personal bank accounts and entities linked to promoters.
• Inadequate disclosure of material information to investors and market participants.
• Non-cooperation during regulatory examination and forensic review processes.

SEBI emphasized that these observations are based on preliminary findings and remain subject to further investigation.

Company's Response

Reacting to the regulator’s order, Rajesh Mehta, Chairman and Managing Director of Rajesh Exports, rejected the allegations. Speaking on June 4, he stated that the interim order does not accurately reflect the facts and maintained that the findings are incorrect.

According to Mehta, the company is currently reviewing the contents of the order in detail and will submit an appropriate response before the regulatory authorities.

Market Implications

The development has attracted significant attention from investors and market observers due to the scale of the alleged revenue misstatement and the seriousness of the regulatory concerns. The outcome of the forensic audit and subsequent proceedings could have important implications for corporate governance standards, financial reporting practices, and investor confidence in listed entities.

As the investigation progresses, stakeholders will closely monitor further disclosures and regulatory actions in the matter.

Short Summary

SEBI has issued an interim ex-parte order against Rajesh Exports Ltd. and its CMD Rajesh Mehta, alleging financial misrepresentation involving nearly ₹15.15 lakh crore of reported revenue over five years. The regulator has ordered a fresh forensic audit after citing concerns over accounting practices, fund routing, and inadequate cooperation during the investigation.