SEBI continues curbs on Rajesh Exports, chairman over unresolved concerns in financial disclosures

New Delhi, Oct 14 (IANS) The Securities and Exchange Board of India (SEBI) has upheld its interim directions against Rajesh Exports Limited (REL) and its chairman Rajesh Mehta, citing unresolved concerns over the accuracy, completeness and verifiability of the company's financial disclosures. 

In a confirmatory order, SEBI said a substantial discrepancy remained between the consolidated revenue reported by Rajesh Exports and the standalone revenue disclosed by its Swiss subsidiary, Valcambi SA, over a five-year period from FY21 to FY25.

According to the regulator, Rajesh Exports reported consolidated revenue of Rs 15.34 lakh crore during the period, while Valcambi SA's standalone revenue stood at Rs 3,027 crore. 

The company had argued that differences in reporting periods between Indian and overseas entities accounted for the variation. However, SEBI said the explanation failed to adequately justify the scale of the discrepancy, even when figures for the entire five-year period were examined collectively.

SEBI Whole-Time Member Kamlesh Chandra Varshney said the noticees had not demonstrated, by referring to underlying records, how reporting-period differences could explain the magnitude of the revenue mismatch. 

He observed that the explanation was not tenable and that concerns regarding the reliability and verifiability of the consolidated revenue figures continued to persist.

The regulator said the company had submitted additional information following the interim order, but the material furnished did not satisfactorily address the deficiencies identified during the investigation. 

Several records sought by the regulator either remained unavailable, were provided incompletely, or were submitted in a manner that did not permit independent verification.

Rajesh Exports and its chairman had cited confidentiality obligations, contractual arrangements, data-protection requirements and foreign laws as reasons for their inability to provide certain information. 

SEBI, however, noted that the available material did not establish that all reasonable efforts had been made to obtain and furnish the information through legally permissible means.

The market regulator also continued restrictions imposed on Mehta, barring him from buying, selling or otherwise dealing in Rajesh Exports securities, directly or indirectly, until further orders.

Addressing the request for lifting the trading restraint, SEBI said the absence of identified trading in the company's shares was not sufficient grounds to revoke the restriction. 

The regulator pointed out that significant company transactions were routed through Mehta's personal bank accounts and that the noticees had failed to satisfactorily explain the legal authority, approvals and documentation under which such arrangements were undertaken.

SEBI further noted that certain third-party entities had indicated their dealings were conducted with Mehta personally rather than with Rajesh Exports. 

It also flagged unresolved issues relating to discrepancies in sales and purchase figures submitted to the regulator, the completeness of consolidated financial information, and disclosures involving Mehta and connected entities.

The regulator emphasised that the fact that the company's financial statements had been audited did not, by itself, resolve the concerns identified during the proceedings.

As part of the order, Rajesh Exports has been directed to ensure true, fair, accurate and complete disclosures relating to its financial statements, related-party transactions and other material information in compliance with applicable regulations.

SEBI has also instructed the company and its chairman to fully cooperate with the ongoing investigation and the newly appointed forensic auditor by providing all required documents and information. The regulator directed the investigating authority to complete the probe expeditiously.

--IANS

pk