Mumbai: Markets regulator Sebi on Wednesday banned Rajesh Mehta, Chairman and Managing Director of Rajesh Exports, from dealing in the company's shares until further orders. In its interim order, Sebi also directed Rajesh Exports to cooperate with the regulator's investigating officer and forensic auditors examining the company's books.
Initial Findings Show Manipulation
Sebi's initial investigations revealed that the company had manipulated its books of accounts over several years starting from FY21, particularly inflating revenues from overseas subsidiaries. However, when asked by Sebi and its forensic auditors, the company did not fully cooperate.
The order stated that 97%-99% of the company's revenue was "inflated, egregious and unheard of." It further noted that the company had misrepresented approximately Rs 15.2 lakh crore, representing 99.8% of its revenues 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 order said.
Investment in African Gold Mines
The company had announced in FY23 that it 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 those of any of its subsidiaries. Sebi's investigation and forensic audits also found that the company had resorted to methods "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."
Further Actions
In addition to banning Mehta and directing cooperation with regulators, Sebi forwarded a copy of its order to the National Financial Reporting Authority for appropriate actions against the statutory auditors, BSD & Co, of Rajesh Exports.
