Rajesh Exports hits lower circuit amid ED probe
What's the story
Shares of Rajesh Exports, a leading gold refining and jewelry manufacturer, hit the 5% lower circuit on Thursday. The fall comes as the Enforcement Directorate (ED) intensified its investigation into the company over alleged irregularities. The ED recently conducted search and seizure operations at nine locations associated with Rajesh Exports under the Foreign Exchange Management Act (FEMA).
Allegations
Probe uncovers alleged share price manipulation, missing records
The ED's investigation has uncovered a number of alleged irregularities at Rajesh Exports. These include suspected share price manipulation, missing records related to foreign transactions, and unusual remuneration practices. The agency revealed that the company's Chief Financial Officer (CFO) had allegedly not received any salary since 2020 while its Managing Director was drawing a monthly salary of just ₹17,000 despite the company reporting consolidated revenues of nearly ₹7.7 lakh crore.
Investigation
Ministry of Corporate Affairs orders SFIO investigation into Rajesh Exports
The Ministry of Corporate Affairs has ordered an investigation by the Serious Fraud Investigation Office (SFIO) into Rajesh Exports, as reported by The Economic Times. The probe is expected to examine allegations of financial irregularities flagged by market regulator SEBI. This comes after SEBI's interim order on June 3, which alleged that Rajesh Exports had inflated its consolidated revenue over five years by attributing substantial revenue to overseas subsidiaries like Switzerland-based Valcambi SA.
Trading ban
SEBI's order raises concerns about misrepresentation of consolidated revenues
Following SEBI's order, the company's promoter Rajesh Mehta was barred from buying, selling or dealing in the company's securities pending further proceedings. The latest allegations by ED build on concerns earlier raised by SEBI about Rajesh Exports misrepresenting consolidated revenues for FY21-FY25. The market regulator had also questioned the veracity of several trade receivables, payables and inventory-related disclosures at Rajesh Exports.