The Securities and Exchange Board of India (SEBI) has confirmed and continued its interim restrictions on Rajesh Exports and its chairman, Rajesh Mehta, citing unresolved concerns over the company’s financial disclosures, including a significant disparity between its consolidated revenue and the standalone revenue reported by its Swiss subsidiary, Valcambi SA.
In its final order on Wednesday, the market regulator said Rajesh Mehta would remain barred from buying, selling or otherwise dealing, directly or indirectly, in the securities of Rajesh Exports until further orders. The company has also been directed to ensure true, fair, accurate and complete disclosures of its financial statements and other material information.
At the centre of SEBI’s concerns is a substantial gap in revenue figures for the five years from FY21 to FY25. Rajesh Exports reported consolidated revenue of ₹15.34 lakh crore over the period, while Valcambi SA’s standalone revenue for the corresponding period stood at ₹3,027 crore.
The regulator rejected the company’s explanation that differences in the reporting periods of Indian and overseas entities accounted for the disparity, saying the gap remained unexplained even when the figures for the full five-year period were considered together.
SEBI whole-time member Kamlesh Chandra Varshney said the discrepancy continued to raise concerns about the verifiability and reliability of the company’s consolidated revenue disclosures.
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The Noticees have not, by reference to the underlying records, demonstrated at this stage how the difference in reporting periods accounts for the magnitude of the disparity observed in the revenue attributable to Valcambi and the revenue reflected in the consolidated financial statements SEBI WHOLE-TIME MEMBER KAMLESH CHANDRA VARSHNEY
Varshney added that the explanation offered by the noticees was not tenable and that concerns over the accuracy, completeness and verifiability of the disclosures remained unresolved.
“The justification given by Noticees with regard to this is not tenable. This continues to raise a prima facie concern regarding the verifiability and reliability of the consolidated revenue figures disclosed by REL. In view of the above, I find that the Noticees have failed to rebut the prima facie finding recorded in the Interim Order and the prima facie concern regarding the accuracy, completeness and verifiability of the relevant consolidated financial disclosures continues to subsist,” he said.
SEBI says key information remains outstanding
SEBI said the noticees had submitted additional information after the interim order was issued in June, but had not adequately addressed the deficiencies identified by the regulator. Much of the information sought remained outstanding, while some records were either incomplete or supplied in a form that did not allow independent verification.
The noticees cited confidentiality obligations, data-protection requirements, foreign laws and contractual arrangements to explain why certain information could not be provided. However, SEBI said the material available did not establish that all reasonable steps had been taken to obtain the information or that it could not be furnished through legally permissible means.
The regulator also flagged discrepancies in sales and purchase figures submitted to it, along with concerns about related-party transactions and disclosures involving Mehta and connected entities. It said the fact that the company’s financial statements had been audited did not, by itself, resolve questions about the reliability and completeness of the information.
Why restrictions on Rajesh Mehta remain in place
SEBI said the absence of identified trading in Rajesh Exports shares by Mehta was not, on its own, sufficient grounds to lift the restrictions.
The regulator noted that substantial company transactions had been routed through Mehta’s personal accounts. It said the noticees had not satisfactorily established the legal basis, authority, approvals and documentation under which he had acted on behalf of the company. SEBI also cited instances in which third-party entities indicated that their dealings were with Mehta rather than Rajesh Exports.
The order directs the noticees to cooperate with the investigation and the forensic auditor appointed after the interim order, and to provide the required documents and information. SEBI has also directed the investigating authority and the forensic auditor to complete their work expeditiously.
The restrictions will remain in force until further orders.