Rajesh Exports shares plunge 5 pc, hit lower circuit for second straight day

Shares of Rajesh Exports tumbled 5 per cent for the second straight session on Friday, hitting lower circuit limits after capital markets regulator Securities and Exchange Board of India (SEBI) barred the company’s promoter and CEO, Rajesh Mehta from dealing in the company’s securities over alleged financial irregularities. 

The stock declined as much as 4.99 per cent to hit the lower circuit limit at Rs 98.73 on the NSE, while on the BSE it declined 4.97 per cent to Rs 99.45.

The sharp selloff came after Sebi issued an interim order alleging large-scale misrepresentation of financial statements, diversion of funds and inadequate disclosures regarding related-party transactions and fund flows.

According to the regulator’s interim order, its investigation prima facie revealed instances of routing and layering of funds through personal accounts and related entities without adequate disclosures or supporting documentation.

Sebi said repeated summons and opportunities were provided to the company to furnish accurate financial statements and records explaining the end-use, business rationale and ultimate beneficiaries of fund flows, but the responses remained unsatisfactory.

The regulator also flagged non-cooperation by the company’s statutory auditors, stating that despite assurances during depositions, audit working papers were not provided.

According to Sebi, such sustained non-cooperation indicated possible attempts to suppress material information and obstruct regulatory investigations.

The market regulator further observed that nearly 97-99 per cent of the company’s revenue appeared to be inflated, calling the alleged irregularities “egregious and unheard of”.

“I note that REL has prima facie misrepresented approximately Rs 15,15,385 crore, representing about 99.80 per cent of revenues attributed to subsidiaries during FY21 to FY25,” Sebi Whole Time Member Kamlesh Chandra Varshney said in the interim order.

The order noted that Mehta exercised substantial control over the company’s day-to-day affairs and financial operations and therefore restrained him from buying, selling or dealing in securities of the company, directly or indirectly, until further orders.

Meanwhile, Rajesh Exports denied the allegations and maintained that there were no financial irregularities.

In an exchange filing, the company said its revenues were correctly reported and suggested that there appeared to be a communication gap between the company and the regulator.

The Bengaluru-based company said it remains confident that the regulator will arrive at the correct conclusion after reviewing authenticated documents.