Sebi order bars Rajesh Mehta from Rajesh Exports securities over alleged misstatements

Capital markets regulator Sebi on Wednesday restrained Rajesh Exports Ltd promoter and CEO Rajesh Mehta from trading in the company’s securities. Sebi linked the action to alleged large-scale falsification in financial statements and suspected diversion of funds. The interim move also asked the company to correct disclosures under the Listing Obligations and Disclosure Requirements, or LODR, rules.

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Sebi said a 109-page interim order recorded signs of routed and layered fund flows. Sebi alleged money moved through personal accounts and related entities. Sebi said these transfers lacked proper disclosures and supporting papers. The regulator also asked Rajesh Exports Ltd to publish true and fair financials, including related party transactions.

Sebi Rajesh Exports investigation details

The regulator said the case began after a shareholder complaint received on March 11, 2024. The complaint alleged possible misstatement in the books. It referred to a large amount of trade receivables pending for more than two years. Sebi said the present action followed an investigation covering April 1, 2020 to March 31, 2024.

Sebi said Rajesh Exports Ltd received repeated summons during the probe. Sebi said the firm got several chances to submit accurate financial statements and full records. Sebi sought explanations on end-use, business purpose, and final beneficiaries for fund movements. Sebi said the responses did not meet requirements and remained unsatisfactory.

Sebi Rajesh Exports order and audit concerns

Sebi also pointed to a lack of cooperation from Rajesh Exports Ltd statutory auditors. The order said the auditors promised audit working papers during deposition. Sebi said the auditors later did not provide them. Sebi said such sustained non-cooperation suggested an effort to hide key information. Sebi said it also obstructed the regulatory inquiry.

Sebi said the inquiry found major irregularities in reported performance. Sebi observed that about 97-99 per cent of Rajesh Exports Ltd revenue appeared inflated. Sebi described the scale as prima facie "egregious and unheard of\". The regulator said this was among the main aberrations noticed in the matter.

Sebi said Rajesh Mehta acted as the key decision-making authority at Rajesh Exports Ltd. Sebi said Rajesh Mehta had significant control over daily affairs and financial operations. This included the company’s subsidiaries. On that basis, Sebi barred Rajesh Mehta from buying, selling, or dealing in REL securities. The restraint applies directly or indirectly until further orders.

Sebi also told Rajesh Exports Ltd and Rajesh Mehta noticees to assist the investigating authority. Sebi ordered them to submit all documents and explanations sought within 30 days. The regulator also directed a new forensic auditor to finish the review of the company’s books. Sebi said earlier forensic work faced inadequate cooperation, leading to the new appointment.

With inputs from PTI