SEBI orders interim restrictions on Rajesh Exports Limited and Promoter Rajesh Mehta following prima facie findings of fraudulent consolidated financials, non-cooperation, and misuse of company funds
In a landmark interim order dated June 3, 2026, the Securities and Exchange Board of India (SEBI) has issued serious findings against Rajesh Exports Limited (REL), a listed gold refiner and manufacturer, for engaging in manipulative, fraudulent, and unfair trade practices. The probe, covering the period from April 1, 2020, to March 31, 2024, revealed that REL grossly misrepresented its financial statements, concealed material information, and misused company funds through related-party transactions and promoter-controlled entities, thereby misleading investors and impairing market integrity.
The SEBI investigation was triggered by a shareholder complaint alleging financial misrepresentation, especially concerning long-outstanding trade receivables. The forensic audit, hampered by REL's non-cooperation, uncovered that REL failed to upload audited financial statements of its subsidiaries and step-down subsidiaries as mandated by the Companies Act, SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations, and SEBI Act.
The consolidated financial statements of REL were found to have overstated revenues by approximately INR 15,15,385 crore for the fiscal years 2020-21 to 2024-25, constituting 99.80% of its consolidated revenue. REL's standalone financials were inflated by recording non-genuine transactions worth about INR 11,487 crore in sales and INR 11,488 crore in purchases with Affluence Shares & Stocks Pvt Ltd, a SEBI-registered stockbroker, despite Affluence denying any such transactions with REL. Further, REL improperly included foreign exchange fluctuations and interest income from fixed deposits and mutual funds within operational revenue, inflating turnover figures.
REL’s consolidated financial statements also improperly included intra-group investments and trade payables without elimination, artificially inflating the balance sheet size. The company netted trade receivables and payables aggregating to INR 2,914 crore without appropriate disclosures or agreements. Additionally, REL routed company funds through promoters’ personal accounts without approvals or disclosures, raising serious concerns about fund misutilization.
The role of Mr. Rajesh Mehta, Promoter and Executive Chairman of REL, was central to these irregularities. SEBI found that he exercised substantial control over REL and its subsidiaries and was actively involved in the financial misrepresentation and routing of funds. The company and Mr. Mehta failed to cooperate with the forensic auditor and the investigation, withholding critical documents and data.
These acts distorted the price discovery process, misleading investors into trading REL shares at artificially inflated prices. The market capitalization of REL peaked at over INR 30,000 crore based on manipulated data but later eroded by approximately INR 27,999 crore, causing substantial public investor wealth loss estimated at over INR 12,700 crore.
In light of these findings, SEBI has issued interim ex-parte directions restraining Mr. Rajesh Mehta from dealing in REL securities and mandating full cooperation with the ongoing investigation and forensic audit. REL has been directed to make true and fair disclosures of its financial statements and related-party transactions and to furnish all required documents within 30 days.
SEBI emphasized that the financial statements of listed companies must be free from misstatements and must provide accurate, complete, and transparent information. The regulator underscored its duty to protect investors from market abuse and to maintain market integrity, citing Supreme Court judgments that reaffirm the importance of truthful disclosures and severe consequences for fraud in the securities market.
The forensic auditor appointed earlier has been replaced due to non-cooperation, and a new forensic auditor will complete the audit. The National Financial Reporting Authority has also been informed to consider action against REL’s statutory auditors for their dereliction.
This order signals SEBI's firm stance against corporate fraud and its commitment to safeguarding investor interests and the credibility of India’s securities market.
Bottom line:-
Rajesh Exports Limited (REL) prima facie engaged in manipulative, fraudulent and unfair trade practices by misrepresenting financial statements, concealing material information, and misutilizing funds through related party transactions and promoter-controlled entities, thereby misleading investors and impairing market integrity.
Statutory provision(s): SEBI Act, 1992 sections 11(1), 11(2)(ia), 11(4), 11B, 12A(a), 12A(b), 12A(c), 19; Securities Contracts (Regulation) Act, 1956; SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Regulations 4(1)(a), 4(1)(b), 4(1)(c), 4(1)(e), 4(1)(g), 4(1)(h), 4(1)(j), 4(2)(e)(i), 23(2), 33(1)(a), 33(1)(c), 34(3), 46(2)(s), 48); SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (Regulations 3(b), 3(c), 3(d), 4(1), 4(2)(e), 4(2)(f), 4(2)(k), 4(2)(r)); Companies Act, 2013 Sections 128(1), 136(1); Indian Accounting Standards (Ind AS 1, Ind AS 21, Ind AS 24, Ind AS 32, Ind AS 107, Ind AS 110, Ind AS 115).
Rajesh Exports Limited (REL), (SEBI) : Law Finder Doc id # 2916764
