Rajesh Exports Plummets as ED Probes Management Salaries and SFIO Steps In Over Financial Irregularities
Stock Tanks on Regulatory Scrutiny
Shares of Rajesh Exports faced severe selling pressure in morning trade on Thursday, hitting the 5 percent lower circuit. The stock was locked at Rs 97.02, registering a decline of 4.99 percent around 10 AM. This sharp drop comes amid escalating scrutiny from regulatory bodies regarding the gold refining and jewellery manufacturer.The intensified investigation centers on alleged financial irregularities discovered during prior regulatory actions. A report surfaced indicating that the Serious Fraud Investigation Office (SFIO) is set to launch a detailed probe into the company's operations.
ED Uncovers Alleged Salary and Share Manipulation Irregularities
This latest development follows disclosures made by the Directorate of Enforcement (ED) regarding search and seizure operations conducted at nine locations associated with Rajesh Exports and its associates. These operations were carried out under the Foreign Exchange Management Act (FEMA).The ED investigators reportedly uncovered several alleged irregularities within the company's operations. Among these findings were suspected share price manipulation and missing records pertaining to foreign transactions. Most notably, investigations flagged unusual remuneration practices among the top management.
Questionable Remuneration Practices Surface in Investigation
Specific concerns regarding compensation at Rajesh Exports surfaced during the ED probe. The agency noted that the Chief Financial Officer of Rajesh Exports had allegedly not received any salary since 2020.Furthermore, significant questions were raised over the compensation structure for senior leadership. It was reported that the company's Managing Director was drawing a monthly salary of around Rs 17,000, even as the company reported consolidated revenues amounting to nearly Rs 7.7 lakh crore.
Market Regulator Sebi Flags Inflated Revenue in Five-Year Span
The current regulatory climate intensifies the existing concerns raised by market regulator Sebi. This follows an interim order issued by Sebi on June 3. The regulator alleged that Rajesh Exports had inflated its consolidated revenue over a five-year period.The allegations relate to attributing substantial revenue to overseas subsidiaries, particularly Switzerland-based Valcambi SA. This was highlighted despite the subsidiary's audited standalone financial statements showing significantly lower figures. Following this order, Sebi barred the company’s promoter from dealing in the securities.
SFIO Probe Focuses on Financial Integrity
The move by the Ministry of Corporate Affairs to initiate an SFIO investigation is reported following these findings. The probe is expected to thoroughly examine allegations of financial irregularities flagged previously by market regulator Sebi.SFIO, which specializes in investigating complex corporate fraud cases, can be directed to investigate a company under Section 212 of the Companies Act, 2013. This action can be based on reports from the Registrar of Companies or for public interest purposes.
Rajesh Exports has issued statements denying any wrongdoing and has contested all findings presented by Sebi.
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