Sebi Bans Rajesh Exports Promoter for Financial Misrepresentation

New Delhi, Jun 3 (PTI) Capital markets regulator Sebi on Wednesday barred Rajesh Exports Ltd's promoter and CEO Rajesh Mehta from dealing in the company's securities, alleging large-scale misrepresentation of financial statements and diversion of funds.

The regulator also directed the company to make true and fair disclosures of their financial statements, related party transactions and other disclosures under the Listing Obligations and Disclosure Requirements (LODR) regulations.

In a 109-page interim order, Sebi said its investigation has revealed misrepresentation in financial statements as well as instances of routing and layering of funds through personal accounts and related entities without adequate disclosures or supporting documentation.

The markets watchdog said the company was issued repeated summons and given several opportunities to furnish true and fair financial statements, complete records explaining the end-use, business rationale and ultimate beneficiaries of such fund flows, but there was no satisfactory response.

Sebi also flagged non-cooperation by REL's statutory auditors. According to the order, the auditors, during the deposition, promised to provide audit working papers, but eventually failed to do so.

The regulator said such sustained non-cooperation is itself indicative of an intent to suppress material information and obstruct regulatory inquiry.


Sebi further observed that among the aberrations prima facie noted in the matter, about 97-99 per cent of REL's revenue was inflated, are egregious and unheard of.

The order held that Mehta was the key decision-making authority within REL and exercised substantial control over the day-to-day affairs and financial operations of the company and its subsidiaries.

Therefore, the regulator restrained Rajesh Mehta from buying, selling or dealing in securities of REL, either directly or indirectly, until further orders.

Sebi also directed REL and Mehta (noticees) to cooperate with the investigating authority and furnish all the documents and explanations sought within 30 days.

It further ordered the appointment of a new forensic auditor to complete the audit of the company's books after noting inadequate cooperation during the earlier forensic exercise.

The order came after Sebi received a complaint on March 11, 2024 from an REL shareholder who alleged potential financial misrepresentation in the books with respect to a large sum of trade receivables outstanding for more than two years.

The present proceedings have emanated from an investigation conducted for the period between April 1, 2020 to March 31, 2024.