Sebi bans Rajesh Exports' CMD for fin irregularities

MUMBAI: Markets regulator Sebi on Wednesday banned Rajesh Mehta, CMD of Rajesh Exports from dealing in the shares of the company till further orders. In its interim order, Sebi also directed Rajesh Exports to cooperate with the regulator's investigating officer and forensic auditors to look into the books of the company.

Sebi's initial investigations showed that the company had, over several years starting FY21, manipulated its books of accounts, especially its revenues from overseas subsidiaries, to inflate its revenues. However, when asked by Sebi and its forensic auditors, the company didn't fully cooperate.

The order said that 97%-99% of the company's revenue was "inflated, egregious and unheard of." The order further noted that the company had misrepresented approximately Rs 15.2 lakh crore, representing 99.8% of its revenues which are attributed to subsidiaries during FY21 to FY25. "The aforesaid conduct appears to have prima facie enabled (Rajesh Exports) to portray an inflated and misleading picture of its operational scale, consolidated financial position and financial health before investors and the securities market."

The company, in FY23 had also announced that it had invested Rs 1,035 crore in gold mines in Africa. However, neither any such investment was reflected in the standalone financial statements of Rajesh Exports for FY2023, nor in the standalone financial statements of any of the company's subsidiaries.

Sebi's investigation and forensic audits also found that the company had resorted to ways "to mislead and defraud investors dealing in the shares of the company by portraying a misleading picture of its trade receivables, trade payables and overall financial position."

In addition to the ban on Mehta, and directions for cooperation with the regulator's officers and auditors, Sebi also forwarded a copy of its order to "National Financial Reporting Authority for appropriate actions, if any, against the statutory auditors (BSD & Co)" of Rajesh Exports.