Rajesh Exports ₹1,515,000 crore: NFRA probe after SEBI

What triggered the NFRA move

The National Financial Reporting Authority (NFRA) has initiated its probe into the financial misstatement matter related to Rajesh Exports, NFRA Chairman Nitin Gupta said on Tuesday in Mumbai. Gupta said, “We are working on it. We have started our process,” while declining to share any timeline. The development follows an interim action by market regulator Securities and Exchange Board of India (SEBI) against the company over alleged discrepancies in its financial statements over a long period. The matter involves alleged misrepresentation of consolidated revenues aggregating approximately ₹1,515,000 crore. SEBI has said it referred audit-related issues to NFRA for appropriate action against the company’s statutory auditors.

SEBI’s interim order and the core allegations

SEBI passed an interim ex-parte order against Rajesh Exports Ltd (REL) and its Chairman and Managing Director, Rajesh Mehta, citing prima facie findings of financial misrepresentation, fund-routing irregularities, and non-cooperation during an ongoing investigation. In its 109-page interim order, SEBI alleged that REL misrepresented consolidated revenues aggregating to approximately ₹1,515,000 crore for the period FY2020-21 to FY2024-25. The regulator said this represented 99.80 percent of the company’s total consolidated revenue during the period. SEBI also alleged a multi-year pattern of recording non-genuine transactions, adopting improper accounting treatments, routing corporate funds through personal accounts and promoter-linked entities, and failing to make adequate disclosures to investors.

The interim findings, as described in the reporting, include alleged inconsistencies in sales data, consolidation records and related-party disclosures. Another strand of SEBI’s scrutiny focused on reported revenues attributed to overseas subsidiaries, particularly Switzerland-based Valcambi SA, and the gap between those reported consolidated numbers and the subsidiary’s audited standalone financial statements. SEBI’s investigation and forensic review were described as ongoing, and the regulator’s order was characterised as interim, not a final adjudication.

Rajesh Exports’ response to the allegations

Rajesh Exports has denied any financial irregularities. The company has maintained that the revenues reported in its financial statements were accurate. It also said there appeared to be a communication gap between the markets regulator and the firm. In a press release referenced in the reporting, the company argued that SEBI’s conclusions stemmed from confusion between revenue and EBITDA figures at Swiss refiner Valcambi SA, an indirect subsidiary. The reporting also notes that the company is expected to get an opportunity to challenge the allegations and present its defence as proceedings continue.

NFRA’s role and what it may examine

NFRA’s initiation of process brings the audit oversight framework into the spotlight. People aware of SEBI’s communication said NFRA is expected to independently assess the issues highlighted by SEBI and determine whether further examination or proceedings are warranted. Any review by NFRA would be separate from SEBI’s securities market investigation. The focus would be on whether applicable auditing standards, documentation requirements, and professional responsibilities were adequately discharged by the company’s statutory auditors.

NFRA Chairman Nitin Gupta’s comments indicated that the regulator has started its work, but without indicating a timeline. SEBI had, in June, referred the matter to NFRA for appropriate action against the statutory auditors, according to the reporting. The key point for investors is that NFRA’s work, if it proceeds further, can widen the scrutiny to audit processes and documentation linked to the financial reporting issues raised in the interim order.

Enforcement Directorate searches and FEMA-related findings

Parallel to the securities and audit scrutiny, the Directorate of Enforcement (ED) has reported findings from searches linked to Rajesh Exports. The ED said searches at premises linked to REL in Bengaluru and Mumbai unearthed multiple suspected violations under the Foreign Exchange Management Act (FEMA). The agency said it conducted search and seizure operations at nine premises on June 23 as part of an ongoing FEMA investigation into Rajesh Exports and connected persons.

According to the ED, the company “failed to produce documentation in respect of its foreign transactions, including its imports, exports, overseas investments and the settlement of foreign trade receivables and payables,” making verification of the genuineness of such transactions “almost impossible.” The ED also alleged opaque trade set-offs involving around ₹3,000 crore with suspicious foreign parties based in the UAE and other overseas jurisdictions. In addition, the ED cited a 40 percent stock mismatch and alleged share manipulation involving offshore benamidars, and said the probe revealed that “over ₹600 crore were siphoned out of India through share-manipulation using NRI benamidars.” The ED said incriminating documents and digital evidence were seized, and that further investigation is underway.

How the case developed over time

The reporting traces the matter back to a shareholder complaint received in March 2024 that raised concerns over substantial trade receivables reflected in the company’s accounts. Following a preliminary review, SEBI launched a detailed investigation covering the period from April 2020 to March 2024 and appointed BDO India Services as the forensic auditor. The regulator later issued its interim order dated June 3, 2026. Subsequent reporting described SEBI writing to NFRA highlighting audit-related issues. In June, SEBI referred the matter to NFRA for action regarding the statutory auditors.

Key facts at a glance

Market impact and why investors are watching

The immediate market relevance is the scale of the alleged revenue misstatement and the breadth of regulatory scrutiny. SEBI’s interim order alleges that the misrepresented revenue was a dominant part of consolidated revenue over multiple years, which places the reliability of disclosures at the centre of investor assessment. The move to involve NFRA adds a separate track that can examine audit conduct, documentation and compliance with standards, beyond securities law questions.

The ED’s FEMA-related allegations introduce another dimension, focused on cross-border transactions, documentation, and trade receivables and payables. The agency’s claims around missing records, set-offs of about ₹3,000 crore, a 40 percent stock mismatch, and alleged siphoning of more than ₹600 crore could raise questions about internal controls and the robustness of transaction trails, subject to the outcome of investigations.

Analysis: What the NFRA process signals

NFRA’s initiation of process, following SEBI’s referral, indicates that the audit oversight mechanism is being activated in a high-profile case where the interim order raises questions about verifiability of reported numbers. The reporting suggests NFRA’s examination, if it progresses, would be structured around auditing standards and professional responsibilities. This matters because it separates the question of what was reported in financial statements from how audit work was planned, documented and concluded.

At the same time, it is important to note the procedural posture described in the reporting. SEBI’s order is an interim order, and investigations by SEBI and the forensic auditor are described as ongoing. Rajesh Exports has denied the allegations and said its reported revenues were correct. The ED has stated that further investigation is underway following seizures during searches.

What to watch next

Investors and stakeholders will watch for any formal NFRA communication outlining the scope of its examination and next procedural steps. They will also track progress in SEBI’s ongoing investigation and any further directions arising from the interim order. Separately, updates from the ED’s FEMA investigation, including whether the agency issues further findings based on seized documents and digital evidence, will remain a key development to monitor.