SEBI's 109-page interim order against Rajesh Exports Limited reveals allegations of unprecedented financial misrepresentation. The regulator claims the company misrepresented consolidated revenues aggregating approximately Rs 15.15 lakh crore between FY 2020-21 and FY 2024-25, representing 99.80% of total reported consolidated revenue. This isn't just an accounting error—it's described as "egregious and unheard of" by SEBI Whole Time Member Kamlesh Chandra Varshney.
The misrepresentation allegedly occurred through multiple improper accounting treatments: recording non-genuine and unverifiable transactions, adopting incorrect consolidation of accounts, and failing to disclose related-party transactions. Additionally, derivative transactions undertaken by Rajesh Mehta in his personal capacity were allegedly recorded as company sales and purchases amounting to more than Rs 11,400 crore each. Exchange fluctuation gains and losses amounting to hundreds of crores were incorrectly classified as revenue and purchases, while interest income from mutual funds and fixed deposits was booked as revenue from operations rather than other income.
Standalone revenues worth Rs 12,557 crore during FY21-FY24 were also allegedly misrepresented. These treatments collectively created a misleading picture of the company's operational scale and financial health before investors and the securities market.
Perhaps most alarming are allegations that corporate funds were routed through the personal bank accounts of Rajesh Mehta and Siddharth Mehta without disclosure as related-party transactions or approval from the board and audit committee. This pattern, according to SEBI, demonstrates "systemic failure of corporate governance, concealment of material information and deliberate circumvention of regulatory requirements".
The structure allegedly enabled diversion of funds through promoter-linked entities, obscuring their origin and destination. By not classifying these transactions as related-party dealings, the company avoided SEBI LODR regulations that mandate disclosure and shareholder approval for material related-party transactions. The absence of board and audit committee approvals meant these transactions were never subject to independent review, creating a control environment where substantial sums could move without oversight.
SEBI also flagged false claims about investments in gold mines in Africa. The company's "Other Non-Current Investments" purportedly represented investments in African gold mines, but SEBI found these claims "could not be corroborated with financial statements available on record". This misrepresentation artificially inflated perceived asset quality and created a false impression of business diversification into upstream mining operations.
Unexplained investments and incorrect consolidation of accounts further distorted the company's financial position. The complex structure with overseas subsidiaries—including REL Singapore (contributing 98.5% to consolidated sales), Global Gold Refineries AG, and Valcambi—made verification challenging. SEBI noted that the lack of access to underlying accounting records significantly constrained the forensic review and prevented independent verification of several reported figures.
The statutory auditors' failure to detect or flag the alleged revenue misstatement over five years has prompted SEBI to refer the matter to the National Financial Reporting Authority (NFRA) for examination of their conduct. SEBI noted "prima facie misconduct and dereliction of duties" by the auditors.
The auditors allegedly failed to exercise professional skepticism, accepted management representations without independent verification, and did not adequately test transactions representing 99.8% of revenue. During the investigation, the auditors promised to provide audit working papers but eventually failed to do so—sustained non-cooperation that SEBI says indicates an intent to suppress material information.
An earlier forensic audit was completed without full cooperation from the noticees, necessitating a fresh forensic audit. The earlier auditor was unable to verify large portions of transactions because supporting records were either incomplete or unavailable, with only a small fraction of sampled transactions fully substantiated with supporting documents.
SEBI's interim order imposes severe restrictions. Rajesh Mehta has been restrained from buying, selling, or dealing in Rajesh Exports securities until further orders. The regulator has also frozen the demat accounts of both the company and the promoter to lock down existing assets while the final forensic calculations are concluded.
The stock has already suffered significant damage, declining 45.67% over the past year to Rs 109.38 as of June 3, 2026. Given the allegations that 97-99% of revenue may be inflated, traditional valuation metrics have become meaningless, and the stock faces further downside risk.
The company has been directed to cooperate fully with investigators, provide all pending information within 30 days, and make true and fair disclosures of financial statements and related-party transactions. It must also immediately cease withholding information under the pretext of foreign data protection laws and grant complete, unhindered access to its ERP systems, internal books, and foreign subsidiary records.
Throughout the investigation, Rajesh Exports allegedly hampered SEBI's efforts by failing to provide consolidated-level information and furnishing varying and inconsistent submissions regarding standalone-level information at different stages. This non-cooperation created urgency that justified SEBI's ex-parte interim order.
The company's history of regulatory non-compliance is extensive. Between 2021-2023, it repeatedly missed filing cash flow statements, delayed audit reports, and failed to submit documents in SEBI-approved formats. The NSE noted other governance lapses including late submission of secretariat compliance reports, e-voting results of AGMs, and shareholding pattern submissions.
These systemic issues within the company led to the failure to ensure accuracy, completeness, and transparency in disclosures to stock exchanges and investors. By publishing misrepresented financial results and annual financial statements containing prima facie non-genuine and unsupported transactions, the company failed to ensure accuracy, completeness and transparency in its disclosures.
