Mumbai, June 4: Shares of Raajesh Exports experienced a significant drop of 5% on Thursday, following an interim order issued by the Securities and Exchange Board of India (SEBI) against the company and its promoter, Rajesh Mehta. The stock hit the lower circuit limit after allegations of substantial financial irregularities surfaced, including failure to cooperate with investigations and inflating revenue figures.
During the trading session, Raajesh Exports’ shares opened at ₹104.65, down from the previous close of ₹110.15, marking a decline of 4.99%. The stock’s 52-week high is ₹239, while the low stands at ₹80.11.
In the interim order released on June 3, SEBI indicated that evidence suggests that approximately 97% to 99% of the revenue reported by the company may have been exaggerated.
The order stated, “The irregularities observed at first glance, where nearly 97% to 99% of the company’s revenue appears inflated, are extremely serious and unprecedented.”
Kamlesh Chandra Varshney, a full-time member of SEBI, emphasized the need for immediate regulatory intervention to protect investors and maintain market integrity. Additionally, SEBI has prohibited promoter Rajesh Mehta from buying, selling, or engaging in any transactions involving Raajesh Exports shares.
SEBI has instructed the company to fully cooperate with investigators and provide accurate and fair information regarding its financial statements and transactions with related parties.
This matter stems from a shareholder complaint received in March 2024, which raised concerns about significant trade payables reflected in the company’s books. Following an initial review, SEBI launched an investigation covering the period from April 2020 to March 2024 and appointed BDO India Services as the forensic auditor.
According to the order, Raajesh Exports failed to provide access to key accounting systems, financial records, and essential documents during the investigation, hindering the forensic auditor’s ability to independently verify numerous transactions.
Only a limited number of transactions had the necessary documents provided, while the lack of access to primary accounting data affected the verification of many financial figures.
SEBI also reviewed the financial reporting of several foreign subsidiaries and indirect subsidiaries, including those in Singapore and Switzerland. The regulator alleged that funds may have been routed through structures designed to conceal their true source and final destination, raising questions about the reliability of the company’s financial disclosures.
The order reiterated, “The irregularities observed at first glance, where nearly 97% to 99% of the company’s revenue appears inflated, are extremely serious and unprecedented.”
SEBI has directed Raajesh Exports to submit all pending information requested by investigators within 30 days. Furthermore, a new forensic auditor has been appointed for a more comprehensive examination of the company’s accounts and transactions.
This regulatory action has also impacted shares of the Life Insurance Corporation of India (LIC), which saw a decline of about 1% during trading, as LIC holds approximately 10% stake in Raajesh Exports.
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