Rajesh Exports stock hits 5% lower circuit on Sebi

Stock reaction: lower circuits on BSE and NSE

Shares of Rajesh Exports Ltd came under sharp selling pressure on Thursday after the Securities and Exchange Board of India (Sebi) issued an interim order against the company and its promoter, Rajesh Mehta. On the BSE, the stock hit its 5% lower circuit at ₹104.65. On the NSE, it fell 4.99% to ₹103.92, also locking in the lower circuit. The move stood out against the broader market, with the BSE Sensex down around 0.3% at the time mentioned in the report. The decline reflected investor caution following the regulator’s allegations of financial irregularities and possible revenue inflation. The interim nature of the order means the investigation is still ongoing, but the disclosures triggered immediate price action.

What Sebi alleged in the interim order

Sebi’s interim order runs 109 pages and is dated June 3, according to the reports. The regulator alleged extensive financial irregularities, non-cooperation during the investigation, and possible overstatement of revenues. Sebi described the alleged discrepancies as “egregious and unheard of.” It said findings from its investigation and forensic examination showed prima facie evidence that nearly 97-99% of Rajesh Exports’ reported revenue may have been inflated. In another set of findings, Sebi alleged the company overstated its scale of operations over several years through overseas subsidiaries. The regulator also raised concerns around transactions involving certain overseas entities, stating that the reported turnover did not appear to reflect underlying economic activity.

Scale of alleged revenue misrepresentation

A key figure cited in the interim order is the alleged misrepresentation of subsidiary revenues of about ₹15,15,000 crore during FY21 to FY25. Sebi said this accounted for nearly 99.8% of the company’s reported revenue over the period. The same amount was also referenced as about $158.3 billion in the order, as reported. The allegation is significant not only because of the size but also because it suggests the reported top line may have been largely inconsistent with what the regulator believes the underlying activity supports. Sebi’s order indicates it is examining how reported revenues were recorded and routed, particularly through overseas subsidiaries.

Restrictions on promoter Rajesh Mehta

Pending further directions, Sebi has barred Rajesh Mehta from buying, selling, or otherwise dealing in securities of Rajesh Exports. Another report also stated the regulator temporarily restrained the company and its promoter from participating in the securities market pending further investigation. The order noted that Mehta occupied a central decision-making role in the company and exercised considerable influence over daily operations, financial management, and the functioning of subsidiaries. The restraint is an interim measure, not a final finding, and remains in effect until further orders. The action signals that the regulator considers the alleged issues serious enough to require immediate market-access restrictions while the probe continues.

Directions to the company: disclosures, cooperation, and records

Sebi has directed Rajesh Exports to extend full cooperation to investigators. It also asked the company to ensure “true and fair” disclosures of its financial statements and related-party transactions, including disclosures required under the Listing Obligations and Disclosure Requirements (LODR) framework. The regulator directed the company to submit all pending information sought by investigators within 30 days. These directions focus on both the investigation process and the quality of public disclosures, which are critical for listed entities. The order suggests Sebi is seeking records that can reconcile the reported scale of operations with supporting documentation, including subsidiary-level transactions.

Fresh forensic audit ordered

In addition to the interim restrictions and information requirements, Sebi ordered the appointment of a new forensic auditor. The regulator said the fresh appointment is meant to conduct a more comprehensive examination of the company’s books and transactions. This step follows Sebi’s stated findings from its investigation and prior forensic examination, which it says have already surfaced prima facie issues. A new forensic audit typically implies a deeper review of transaction trails, counterparties, documentation, and accounting treatment, especially where overseas entities are involved. The outcome of such an exercise can influence the direction of the investigation and any subsequent regulatory action.

Company’s response: interim order, documents being submitted

Rajesh Exports responded to an exchange clarification query on the matter, according to the reports. The company said it received an interim order dated 03/06/2026 from Sebi and stressed that the order is interim, with “no adverse conclusion” arrived at by the regulator. It also said the revenues declared by the company are correct and there is no overstatement of revenues. Rajesh Exports attributed the situation to a “communication gap and confusion” between Sebi and the company. It added that it is in the process of clarifying all aspects to Sebi by submitting required and relevant documents, rejected “adverse media reports,” and said it would issue a media clarification.

Key facts at a glance

Market impact and what investors are watching

The immediate market impact was a hard lower circuit on both exchanges, limiting intraday price discovery and highlighting heightened uncertainty. The interim order also increases focus on the company’s future disclosures, especially around related-party transactions and subsidiary operations, which Sebi has specifically highlighted. Investors are also likely to track whether Rajesh Exports submits pending information within the 30-day timeline set by the regulator. The appointment of a new forensic auditor is another key development, as it implies further scrutiny of records and transaction trails. Sebi’s probe remains ongoing, and the company has been given an opportunity to present its response before any final conclusion.

Conclusion

Rajesh Exports shares fell to the 5% lower circuit after Sebi’s interim order alleged large-scale discrepancies in financial reporting and possible revenue inflation, while restricting promoter Rajesh Mehta from dealing in the company’s securities. Sebi has directed the company to submit pending information within 30 days, ensure true and fair disclosures, and undergo a fresh forensic audit. Rajesh Exports has said the order is interim, denied revenue overstatement, and stated it is submitting documents to clarify issues raised by the regulator. The next key milestones will be the company’s compliance with Sebi’s information requests and developments from the expanded forensic review.