India’s Securities and Exchange Board (SEBI) has upheld its temporary restrictions on Rajesh Mehta, the head of Rajesh Exports Limited (REL), preventing him from trading or dealing in the company’s securities until further notice. This decision was formalized by SEBI’s full-time member, Kamlesh C Varshney, in a recent order.
SEBI stepped in following claims of significant financial irregularities, unverified transactions, and poor corporate governance. The regulator highlighted a stark contrast between REL’s reported consolidated revenues of over ₹15 lakh crore from FY21 to FY25 and its Swiss subsidiary, Valcambi SA, which reported only ₹3,027.38 crore in standalone revenues.
Disparities and Unexplained Transactions
The difference between these revenue figures was a staggering 99%. Additionally, SEBI questioned an unverifiable ₹1,035.27 crore investment in African gold mines and the improper handling of ₹2,914 crore in overdue trade receivables.
A central focus of the order was the routine diversion and routing of company funds through the personal bank accounts of Rajesh Mehta and his son Siddharth Mehta. SEBI rejected the defence that Mehta was acting purely as an authorised commercial conduit.
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Violations of Disclosure Norms
SEBI strongly criticized REL’s admission of routing ₹77 crore through Mehta’s personal account for a court deposit, intentionally concealing its identity from the Karnataka High Court. This action raises serious concerns about REL’s governance and its willingness to withhold information from legal authorities.
SEBI also rejected the company’s refusal to provide customer and vendor data, citing Swiss confidentiality laws and private agreements. The regulator asserted that such contractual arrangements cannot override regulatory requirements, emphasizing that allowing this would enable companies to evade disclosures, jeopardizing investor interests.
SEBI instructed the forensic auditor and investigating authority to accelerate their investigation. The regulator maintained that the trading freeze on Mehta is essential to safeguard public investors and uphold market integrity, pledging continued monitoring to protect investor interests.
The case against REL and its chairman, Rajesh Mehta, is a significant one, and the outcome will have implications for the company and its stakeholders. SEBI’s decision to confirm the interim directions and continue the investigation demonstrates its commitment to upholding the integrity of the market and protecting the interests of investors.
