Mumbai, June 3 (IANS) Market regulator SEBI on Wednesday passed an interim ex-parte order against Rajesh Exports Limited (REL) and its Chairman and Managing Director Rajesh Mehta, alleging large-scale financial misrepresentation, fund-routing irregularities and failures in corporate governance during an ongoing investigation.

In its 109-page interim order, SEBI Whole Time Member Kamlesh Chandra Varshney said the regulator had prima facie found evidence of a multi-year pattern involving non-genuine transactions, improper accounting practices, diversion of company funds through promoter-linked entities and inadequate disclosures to investors.

The regulator alleged that Rajesh Exports misrepresented consolidated revenues aggregating approximately Rs 15.15 lakh crore between FY2020-21 and FY2024-25, accounting for nearly 99.8 per cent of the company’s total reported consolidated revenue during the period.

According to the order, the company’s financial statements and books of accounts for FY21 to FY25 appeared to have been manipulated through non-genuine and unverifiable transactions, incorrect consolidation of accounts, unexplained investments, non-disclosure of related-party transactions and routing of funds through entities linked to promoters.

SEBI said these actions created a misleading picture of the company’s operational scale, financial position and overall business health before investors and the securities market.

The regulator further alleged that Rajesh Exports misrepresented standalone revenues worth Rs 12,557 crore during FY21-FY24.

It claimed that derivative transactions undertaken by Rajesh Mehta in his personal capacity were recorded as company sales and purchases amounting to more than Rs 11,400 crore each.

The order also alleged that exchange fluctuation gains and losses amounting to hundreds of crores were incorrectly classified as revenue and purchases, while interest income earned from mutual funds and fixed deposits was booked as revenue from operations.

SEBI additionally questioned the company’s claim regarding investments in gold mines in Africa.

The regulator said it was unable to corroborate the disclosures made by the company regarding “Other Non-Current Investments” allegedly representing investments in African gold mines.

The market regulator also raised concerns over the routing of company funds through the personal bank accounts of Rajesh Mehta and Siddharth Mehta.

According to SEBI, these transactions were not disclosed as related-party dealings and lacked approval from the board of directors and audit committee.

“I prima facie find that the pattern of routing substantial sums through the personal bank accounts of Mr. Rajesh Mehta and Siddharth Mehta, coupled with absence of approvals, non-disclosure and inconsistent explanations, demonstrates systemic failure of corporate governance, concealment of material information and deliberate circumvention of regulatory requirements,” Varshney said in the order.

–IANS

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