Rajesh Exports: SEBI flags ₹15.15 lakh cr FY21-25 order

What SEBI’s interim order says

SEBI has 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. The regulator said the company’s disclosures may have presented an inflated and misleading picture of the group’s operational scale and financial health to investors. SEBI’s observations are based on a forensic review and an investigation that followed a shareholder complaint. The order runs into 109 pages, as reported, and focuses on the period from FY 2020-21 to FY 2024-25, along with an investigation window from April 2020 to March 2024. SEBI has also directed the appointment of a fresh forensic auditor to examine the company’s books and records. It observed that an earlier forensic audit was completed without full cooperation from the noticees.

The headline allegation: subsidiary revenue misrepresentation

At the centre of SEBI’s interim findings is the allegation that Rajesh Exports misrepresented consolidated revenues attributed to subsidiaries. SEBI alleged that REL “prima facie misrepresented approximately ₹15,15,385 crore”, which it said represented 99.80% of revenues attributed to subsidiaries during FY 2020-21 to FY 2024-25. Multiple reports on the order describe this as roughly ₹15.15 lakh crore of revenue misrepresentation. The regulator’s concern is not limited to a single year but spans five financial years, which increases the potential materiality of the alleged disclosure lapses. SEBI said the figures were driven largely by overseas entities and could not be independently verified on the record made available. The regulator also flagged missing subsidiary data and non-cooperation, which it said constrained verification.

Overseas subsidiaries and the Valcambi SA gap

SEBI said 97% to 99% of Rajesh Exports’ consolidated revenue came from overseas subsidiaries, particularly Switzerland-based Valcambi SA. According to the interim order as reported, Valcambi was projected as the principal operating entity, but its audited standalone financial statements showed negligible or only a small fraction of the revenue reported at the group level. A specific comparison cited in reports relates to calendar year 2023. The forensic audit noted that Valcambi SA recorded standalone revenue of ₹542.68 crore, reflecting value-added processing fees, while REL reported consolidated revenue of ₹2,80,676 crore for the same period. SEBI’s interim view is that such gaps raise questions about the authenticity of the group-level revenue presentation. The regulator also alleged that the group’s extremely large revenues from overseas subsidiaries could not be independently verified.

Missing subsidiary financials and limited audit access

SEBI alleged that the company systematically did not disclose its subsidiaries’ financials in the public domain, despite the subsidiaries driving the bulk of consolidated revenue. The regulator said the lack of access to underlying accounting records significantly constrained the forensic review and prevented independent verification of several reported figures. SEBI also cited non-cooperation during the investigation as a key issue. The interim order notes that a prior forensic audit did not receive full cooperation from the noticees, prompting SEBI to order a fresh forensic audit. This is a critical procedural step because the regulator is signalling that the existing forensic work was not sufficient to conclude verification due to missing documentation or access constraints.

Alleged manipulation of books: transactions, consolidation, disclosures

SEBI’s interim order alleges that REL’s books and financial statements for FY21 to FY25 were prima facie manipulated. The regulator listed non-genuine and unverifiable transactions, incorrect consolidation of accounts, unexplained investments, non-disclosure of related-party transactions, and diversion of funds through promoter-linked entities. SEBI’s narrative, as reported, is that the reported scale of operations may have been inflated through accounting practices and entries that did not have a verifiable economic basis. It also raised concerns over the authenticity of reported financial statements due to fund-routing patterns that allegedly obscured origin and destination.

Trades with Affluence Shares and Stocks and derivative activity

The interim order also flagged specific transactions involving an entity named Affluence Shares and Stocks Private Limited. SEBI said Rajesh Exports recorded sales of ₹11,487 crore and purchases of ₹11,488 crore with Affluence, but Affluence denied any such transactions. The regulator alleged these were non-genuine entries linked to Rajesh Mehta’s personal derivative trades. According to the reports, SEBI’s concern is that the entries may have been used to inflate turnover without real economic activity. The order also references the use of corporate funds for personal derivative trading routed through corporate accounts.

Alleged fund diversion to promoter-linked accounts

SEBI alleged that company funds worth ₹339 crore were routed to Rajesh Mehta’s personal accounts, including for derivative trades, without board or audit committee approval and without proper related-party disclosures. It further alleged that a total of ₹926 crore was routed without approvals or disclosures. These allegations, in SEBI’s framing, are tied to governance failures in approvals and disclosure requirements, alongside concerns about fund movement controls. The regulator also estimated wealth erosion for shareholders, including small shareholders, at ₹12,726 crore due to the alleged misrepresentation and fund diversion.

SEBI’s immediate actions: market bar and fresh forensic auditor

Based on its preliminary findings, SEBI has barred the company and its owner from the securities markets till it completes its investigation, as reported by Reuters. Separately, reports also state that SEBI barred Rajesh Mehta from the capital market and from trading in company securities, alongside directing a fresh forensic audit. SEBI has asked the company to cooperate fully with investigators and make true and fair disclosures in its financial statements and related-party transactions. The interim ex-parte nature of the order indicates SEBI’s view that immediate intervention was needed to protect investors and maintain market integrity while the investigation continues.

Key figures flagged in the interim order

Why the order matters for investors and disclosures

The interim order is significant because it challenges the credibility of consolidated financial reporting where most of the reported revenue is generated offshore. SEBI’s focus on unverifiable subsidiary revenue, missing subsidiary financial statements, and gaps between subsidiary standalone numbers and consolidated disclosures goes to the core of how investors assess scale and risk. The allegations on related-party disclosure lapses and routing of funds without approvals also highlight governance concerns. SEBI’s decision to order a fresh forensic audit indicates the regulator believes the evidentiary record is incomplete due to limited cooperation. For listed companies, the case underlines that consolidation is not only an accounting exercise but also a disclosure obligation that must stand up to verification.

What happens next

SEBI’s order is interim and the investigation is ongoing. The regulator has directed cooperation, and a fresh forensic auditor is to be appointed to examine the company’s books and records. The market bar remains in place until SEBI completes its investigation, as reported. Further steps will depend on what the fresh forensic review establishes and what SEBI concludes after examining records across the relevant entities and periods.