Rajesh Exports PLI battery risk after Sebi order FY21-25

Why Rajesh Exports is back in focus

Rajesh Exports has come under renewed regulatory and policy scrutiny after the Securities and Exchange Board of India (Sebi) issued an ex-parte interim order against the company. The order, released on Wednesday evening and running 109 pages, has raised questions over the company’s corporate governance and financial disclosures. The development has also spilled into the government’s evaluation of Rajesh Exports’ participation in the Centre’s production-linked incentive (PLI) scheme for advanced chemistry cell (ACC) battery storage.

The immediate concern for policymakers is whether the company should continue as a beneficiary under the ₹18,100-crore National Programme on Advanced Chemistry Cell Battery Storage, administered by the Ministry of Heavy Industries (MHI). Government officials told The Economic Times that the ministry is examining the Sebi order and there is a strong view that Rajesh Exports should be removed as a beneficiary, with a final decision expected after an internal review.

What Sebi alleged in the interim order

Sebi’s interim order alleged fund diversion, non-transparent related-party arrangements, and disclosure deficiencies. The regulator’s observations and allegations involved two entities connected to the company’s lithium-ion cell business: Elest Pvt. Ltd and ACC Energy Storage Pvt. Ltd. One of these, ACC Energy Storage, is the vehicle through which Rajesh Exports proposed to execute its battery manufacturing plans under the PLI ACC scheme, as per government documents cited in the report.

The regulator also restrained promoter Rajesh Mehta from buying, selling, or dealing in the securities of Rajesh Exports until further orders. Separately, another report stated Sebi barred Rajesh Exports and its founder and executive chairman Rajesh Mehta from accessing the securities market until the completion of its investigation.

The revenue misrepresentation allegation, in numbers

A key part of the scrutiny relates to Sebi’s allegation that Rajesh Exports materially misrepresented revenues attributed to its subsidiaries over multiple financial years. As per the information reported, Sebi alleged that about 99.8% of revenue attributed to Rajesh Exports’ subsidiaries between FY21 and FY25 was materially misrepresented. The amount cited was ₹15.15 trillion, which is ₹15,15,000 crore.

In another section of the coverage, Sebi’s interim order was described as concluding that Rajesh Exports had overstated its revenues by 97-99%. The regulator’s focus included the role of overseas subsidiaries, particularly Switzerland-based Valcambi SA, and the assertion that the company did not consistently disclose subsidiary financial statements in the public domain.

How Rajesh Exports responded

Rajesh Mehta, chairman and managing director, said the company had not received any communication from either the Ministry of Heavy Industries or the Ministry of Corporate Affairs (MCA) at the time of reporting. He characterised the Sebi action as an interim order with “observations” rather than allegations, and said he did not think it should trigger MCA questions.

Rajesh Exports also disputed Sebi’s core observation on revenue reporting. The company said the revenues stated in its financial statements are correct and claimed the mismatch arose because Sebi allegedly considered Valcambi’s EBITDA instead of revenue, leading to an apparent difference of about 97%. The company described the matter as stemming from “confusion and communication gap” and said it was addressing the issue with Sebi by presenting relevant documents.

Why the PLI ACC battery project is now at risk

The policy complication is that ACC Energy Storage is tied to the PLI ACC plan. Under the scheme, Rajesh Exports was selected as a beneficiary but its arm ACC Energy Storage is executing the project. Officials said the company is yet to receive any subsidy under the scheme.

MHI’s own assessment of on-ground progress was also cited by officials. According to an MHI probe referenced in the report, the company had erected only a boundary wall and a shed at the site of the battery manufacturing unit. Officials said Rajesh Exports was to establish 5 GWh capacity, but is yet to set it up.

What the government may do next

Two possible tracks were highlighted in the reporting. First, MHI is considering whether to remove the company from the list of PLI beneficiaries. Second, MCA may consider ordering a probe to ascertain potential corporate governance lapses after Sebi’s findings.

A government official told ET that MHI is examining the Sebi order and a strong view exists to remove the company, with a final call expected after a detailed internal examination. A separate official said MCA is in touch with Sebi and a decision would be made soon, adding that “for the moment, Sebi is taking the lead in this case.”

Background: PLI ACC selections and timelines

Rajesh Exports was selected for incentive under the PLI scheme for ACC battery storage in 2022. At that time, four companies were selected: Reliance New Energy Solar Ltd, Ola Electric Mobility Pvt Ltd, Hyundai Global Motors Company Ltd, and Rajesh Exports. Allotment was made for 50 GWh of battery capacity to four successful bidders under the programme.

The ministry’s stated framework included setting up manufacturing facilities within a period of two years, with incentive disbursed on sale of batteries manufactured in India and emphasis on greater domestic value addition. The tender process described in the reporting noted that 10 bids were evaluated and 9 companies were found responsive, following which financial bids for qualified bidders were opened on March 17, 2022 at 11.45 AM.

Related-party flows flagged: Elest and fund movements

Sebi’s scrutiny also extended to transactions involving promoter-linked entities. In a separate reporting thread, Sebi noted that Elest Pvt Ltd was incorporated in October 2020 by Rajesh Mehta and Prashant Mehta and was engaged in manufacturing lithium-ion cells, lithium-ion battery packs, and electric vehicles.

Sebi found that Rajesh Exports transferred ₹565.88 crore to Elest between FY21 and FY26, while Elest transferred ₹350.03 crore back to Rajesh Exports. This resulted in a net outflow of ₹215.85 crore from Rajesh Exports to Elest, as per the figures stated.

Key facts at a glance

Market and governance implications

For investors, the immediate impact is uncertainty around disclosures and the durability of reported consolidated numbers, especially where a large share of revenue was said to originate from overseas subsidiaries. The policy angle matters because PLI incentives are linked to measurable execution, including setting up capacity and selling batteries manufactured in India.

If MHI decides to remove the company from the beneficiary list, it would directly affect Rajesh Exports’ participation in a flagship manufacturing programme. Separately, if MCA proceeds with a probe, the company could face another layer of oversight beyond Sebi’s ongoing investigation. Both outcomes, as described by officials, depend on internal examination and coordination with the market regulator.

Conclusion

Sebi’s interim order has widened the Rajesh Exports story from a securities-market action to a broader test of governance and project execution under a major industrial incentive scheme. The company has contested Sebi’s revenue observations and said it is engaging with the regulator to clarify the issue. On the policy side, MHI is reviewing the order and MCA is in touch with Sebi, with decisions on potential removal from the PLI list and any further probe expected after their internal processes conclude.