Shares of Rajesh Exports Ltd. saw a decline following an interim order from the Securities and Exchange Board of India (SEBI), which has raised concerns over the company's revenue reporting practices. SEBI's observations suggest significant discrepancies, including allegations of misrepresenting nearly Rs 15.15 lakh crore in revenue from its subsidiaries between fiscal years 2021 and 2025.
Rajesh Exports Cites 'Confusion and Communication Gap'
In response to the SEBI order, Rajesh Exports informed stock exchanges (NSE and BSE) that the core issue stems from a 'confusion and communication gap.' The company stated that SEBI's primary observation regarding mis-reported revenues emerged because the regulator allegedly considered the EBITDA of its Switzerland-based subsidiary, Valcambi SA, instead of its actual revenue. Rajesh Exports claims a 97 percent difference in revenue figures based on this misunderstanding, insisting that its consolidated revenue reporting is accurate.
The company emphasized that SEBI has not made adverse observations regarding its earnings, only expressing suspicion about revenues due to this perceived confusion over Valcambi's figures. Rajesh Exports maintains that there is no logical reason for a listed entity to inflate revenue while keeping earnings constant, as this would negatively impact margins.
SEBI's Interim Order and Allegations
SEBI's interim order outlines serious allegations, including the alleged misrepresentation of approximately 99.80 percent of revenues generated by Rajesh Exports' subsidiaries over the five-year period. Furthermore, the regulator has alleged that company funds were diverted without necessary approvals and disclosures. A key point of contention for SEBI is that 97-99 percent of Rajesh Exports' consolidated revenue reportedly originated from overseas subsidiaries, primarily Valcambi SA, yet the company allegedly failed to consistently disclose these subsidiaries' financial statements publicly.
As a result of these interim findings, SEBI has barred Rajesh Exports and its promoter, Rajesh Mehta, from accessing the securities market until its investigation is complete.
Company Rejects 'Adverse Media Reports,' Confident of Clarification
Rajesh Exports firmly denies any wrongdoing, asserting that all financial reporting has been correct. The company noted that there has been no fine, penalty, or any coercive action by SEBI, which it interprets as an absence of conclusive adverse findings. It expressed confidence that it will be able to clarify the matter with SEBI by presenting all required and relevant documents. The company is actively in the process of submitting these documents and expects SEBI to arrive at a correct conclusion based on authenticated information. Rajesh Exports also explicitly rejected what it termed 'several speculative reports' in the media concerning the interim order.
Market Reaction
Following the news, Rajesh Exports shares experienced a 5 percent drop, settling at Rs 103.92 per share on Thursday, reflecting investor concern over the regulatory scrutiny.