Rajesh Exports shares in focus as Sebi flags Rs 15.15 lakh crore revenue misstatement

Shares of jewellery maker Rajesh Exports Ltd are likely to remain in focus on Thursday after the Securities and Exchange Board of India (Sebi) alleged that the company misrepresented nearly its entire revenue over a five-year period and diverted company funds without requisite approvals and disclosures.

In an interim order, Sebi barred Rajesh Exports and its promoter Rajesh Mehta from accessing the securities market until the completion of its investigation.

Rajesh Exports has not issued an official statement on the matter so far.

What Sebi alleged

According to Sebi, around 97–99 per cent of Rajesh Exports’ consolidated revenue originated from its overseas subsidiaries, particularly Switzerland-based Valcambi SA. However, the company allegedly failed to disclose the financial statements of its subsidiaries in the public domain on a consistent basis.

The regulator noted that while Valcambi SA was presented as the group’s principal operating entity, its audited standalone financial statements reflected negligible revenues.

As a result, Sebi alleged that Rajesh Exports misrepresented approximately Rs 15.15 lakh crore, accounting for 99.80 per cent of the revenues generated by its subsidiaries between FY21 and FY25.

Alleged non-genuine transactions

The market regulator also flagged transactions involving Affluence Shares and Stocks Pvt Ltd. As per the order, Rajesh Exports reported sales of Rs 11,487 crore and purchases of Rs 11,488 crore with Affluence.

However, Affluence reportedly denied carrying out any such transactions.

Sebi alleged that these were non-genuine accounting entries linked to Rajesh Mehta’s personal derivatives trading activities and were used to inflate turnover without any underlying economic substance.

Fund diversion allegations

The regulator further alleged that Rajesh Exports routed Rs 339 crore of company funds to accounts linked to promoter Rajesh Mehta, including for his personal derivative trades, without obtaining board or audit committee approvals and without making proper related-party disclosures.

According to Sebi, a total of Rs 926 crore was routed through such transactions without the required approvals or disclosures.

Shareholder wealth erosion

Sebi estimated that the alleged misrepresentation of financial statements and diversion of funds resulted in wealth erosion of Rs 12,726 crore for the company’s shareholders, including retail investors.