The company said its officials fully cooperated with the authority and provided all the details that were sought during the search.
“The company would like to inform all its stakeholders that the Enforcement Directorate conducted a search on the company premises. The company officials fully cooperated with the authority and provided all the details that were sought for,” according to a stock exchange filing.
According to the company’s exchange filing, the search concluded without any discrepancies being found in the company’s inventory or cash. It also said no valuable items were seized during the operation.
This comes after the Enforcement Directorate on June 24 alleged that Rajesh Exports’ key business indicators showed “significant” departures from normal commercial practices, in addition to the non-availability of records related to foreign transactions.
The federal agency issued a statement after conducting searches against the Bengaluru-based company and persons linked to it on June 23 for suspected contravention of the Foreign Exchange Management Act (FEMA).
The ED identified at least five issues against Rajesh Exports Ltd (REL) and recovered various “incriminating” documents and digital devices during the searches.
Founder and Chairman of the company, Rajesh Mehta, denied any fund diversion or wrongdoing. He had said that the company will fully cooperate with the fresh forensic audit ordered by the SEBI and not challenge the market regulator’s interim order against it.
According to the ED, Rajesh Exports “failed” to produce documentation regarding its foreign transactions, including its imports, exports, overseas investments and the settlement of foreign trade receivables and payables, which rendered verification of the genuineness of such transactions almost impossible.
“For example, contemporaneous records and documentation of the claimed investment of ₹1,035 crore into African mines were neither found nor provided by the company as yet,” it said. The agency claimed that the company’s “key business indicators” showed “significant” departures from normal commercial practices.
For instance, it said the remuneration paid to senior management was “unusually low” compared to the scale of the company’s operations. The chief financial officer (CFO) has not received any salary since 2020, while the managing director was paid only about Rs 17,000 per month, despite the company reporting consolidated revenue of approximately Rs 7.7 lakh crore, the agency found.
It said the probe found “suspicious” block trades in the Rajesh Exports scrip executed by certain individuals whose names also appear in leaks released by the International Consortium of Investigative Journalists (ICIJ), indicating possible undisclosed offshore links that are under examination. “Over ₹600 crore was siphoned out of India through share manipulation using NRI benamidars,” the ED alleged.
The ED also said in the statement that the company was found to be engaged in setting off trade payables and trade receivables from suspicious foreign parties based in the UAE and other overseas jurisdictions. It added that a physical verification of stock carried out during the search revealed a “difference” of about 40% between the stock recorded in the factory registers and the actual goods found at the premises.
The action by the central agency came against the backdrop of the SEBI’s allegation of a massive financial fraud in Rajesh Exports. The market regulator recently alleged that the company had a suspected consolidated revenue inflation of up to ₹15.15 lakh crore for the 2020-21 to 2024-25 fiscal years.
On Thursday (June 25), shares of Rajesh Exports Ltd are at ₹97.75, down by ₹5.10, or 4.96%, on the BSE.