Rajesh Exports Inflated Revenue by 99pc, says SEBI, Shares Crash
The regulator restrained Rajesh Mehta from buying, selling or dealing in securities of REL, either directly or indirectly, until further orders
New Delhi: Shares of gems and jewellery firm Rajesh Exports Ltd dropped 5 per cent to hit the lower circuit limit on Thursday after capital markets regulator Sebi barred its promoter and CEO Rajesh Mehta from dealing in the company's securities, alleging large-scale misrepresentation of financial statements and diversion of funds.The stock declined 4.99 per cent to Rs 104.65 -- the lower circuit limit -- on the BSE.
At the NSE, the stock edged lower by 4.99 per cent to hit the lower circuit limit of Rs 103.92.
The regulator also directed the company to make true and fair disclosures of their financial statements, related party transactions and other disclosures under the Listing Obligations and Disclosure Requirements (LODR) regulations.
In a 109-page interim order on Wednesday, Sebi said its investigation has revealed misrepresentation in financial statements as well as instances of routing and layering of funds through personal accounts and related entities without adequate disclosures or supporting documentation.
The markets watchdog said the company was issued repeated summons and given several opportunities to furnish true and fair financial statements, complete records explaining the end-use, business rationale and ultimate beneficiaries of such fund flows, but there was no satisfactory response.
Sebi also flagged non-cooperation by REL's statutory auditors. According to the order, the auditors, during the deposition, promised to provide audit working papers, but eventually failed to do so.
The regulator said such sustained non-cooperation is itself indicative of an intent to suppress material information and obstruct regulatory inquiry.
Sebi further observed that among the aberrations prima facie noted in the matter, about 97-99 per cent of REL's revenue was inflated, are egregious and unheard of.
The order held that Mehta was the key decision-making authority within REL and exercised substantial control over the day-to-day affairs and financial operations of the company and its subsidiaries.
Therefore, the regulator restrained Rajesh Mehta from buying, selling or dealing in securities of REL, either directly or indirectly, until further orders.