The Enforcement Directorate (ED) has flagged significant irregularities in Rajesh Exports' foreign transactions and compliance, alleging that the company's key business indicators showed 'significant' departures from normal commercial practices. According to the latest ED statement, the agency identified at least five issues against Rajesh Exports Ltd (REL) and recovered various 'incriminating' documents and digital devices during searches conducted on June 23. The ED specifically alleged that 'over ₹600 crore were siphoned out of India through share manipulation using NRI benamidars', with a benamidar being a person or entity in whose name a benami asset is transferred. The agency also found that the company's 'key business indicators' showed significant departures, including unusually low remuneration for senior management - the CFO has not received any salary since 2020, while the managing director was paid only about ₹17,000 per month despite the company reporting consolidated revenue of approximately ₹7.7 lakh crore.
The Bombay Stock Exchange (BSE) on Wednesday sought a clarification from gold jewellery firm Rajesh Exports Ltd over reports of searches conducted by the Enforcement Directorate (ED) at multiple locations linked to the Bengaluru-based company. According to reports from Rediff Money Desk, the exchange's query came a day after the central agency searched nine premises connected to the firm under the provisions of the Foreign Exchange Management Act (FEMA). The development marks a fresh escalation in the legal troubles surrounding the company, which is already facing allegations of a massive financial fraud levelled by the Securities and Exchange Board of India (Sebi).
Rajesh Exports shares tumbled 5% to hit the lower circuit following the ED searches, with the stock dropping 4.99% to hit the lower circuit limit of ₹102.85 on the BSE and tanking 5% to end at ₹102.12 at the NSE. However, the stock had extended gains for the past seven trading sessions, rallying over 40% before the latest decline. The market reaction reflects investor concerns over the mounting regulatory scrutiny facing the company across multiple regulatory bodies, with the BSE and NSE both seeking clarification from the company over the ED action. As of the latest trading session, Rajesh Exports shares closed at ₹102.12, down 5% from the previous close of ₹107.49, with the stock showing a 15.46% gain over the past week despite the recent decline.
The ED investigation revealed that Rajesh Exports 'failed' to produce documentation regarding its foreign transactions, including imports, exports, overseas investments and the settlement of foreign trade receivables and payables, which rendered verification of the genuineness of such transactions almost impossible. As reported by The Hindu BusinessLine, 'for example, contemporaneous records and documentation of the claimed investment of ₹1,035 crore into African mines were neither found nor provided by the company as yet'. The agency also found 'suspicious' block trades in the REL scrip executed by certain individuals whose names also appear in leaks released by the International Consortium of Investigative Journalists (ICIJ), indicating possible undisclosed offshore links that are under examination.
Rajesh Mehta, the company's Founder and Chairman, recently denied any fund diversion or wrongdoing in an interview with PTI, according to Rediff Money Desk. He stated that the firm would fully cooperate with the fresh forensic audit ordered by Sebi and would not challenge the market regulator's interim order against it. The latest ED action comes against the backdrop of SEBI's allegation of a massive financial fraud in Rajesh Exports, with the market regulator recently alleging that the company had a suspected consolidated revenue inflation of up to ₹15.15 lakh crore for the 2020-21 to 2024-25 fiscal years. The company's market capitalization stands at ₹3,015.19 crore with a PE ratio of 28.21 and PB ratio of 0.18, while the stock has seen a 52-week high of ₹237.88 and low of ₹72.63.
