New Delhi, 4 June

Rajesh Exports on Thursday denied any financial irregularities, saying its reported revenues were correct and that there seemed to be a communication gap between the markets regulator and the firm.

The company's statement came a day after SEBI barred Rajesh Exports Ltd's promoter and Chairman and CEO Rajesh Mehta from dealing in thecompany's securities, alleging large-scale misrepresentation of financial statements and diversion of funds.

"The revenues declared by the company are correct, and there is no over-stating of revenues. There seems to be some type of communication gap and confusion between Sebi and the company," Rajesh Exports said in a BSE filing.

The SEBI's order is interim, and there has been no adverse conclusion on any aspect. The company is in the process of clarifying all aspects to Sebi by submitting all the required and relevant documents, the Bengaluru-based jewellery exporter and refiner added.

Rajesh Exports stated that it is confident that Sebi, in its wisdom, will clarify the situation and arrive at the correct conclusion based on the authenticated documents, which the company is in the process of submitting.

Sebi, in its interim order, also directed the company to make true and fair disclosures of financial statements, related-party transactions and other disclosures under the regulatory norms.

"I note that REL has prima facie misrepresented approximately Rs 15,15,385 crore, i.e. representing 99.80 per cent of its revenues, which are attributed to subsidiaries during the period FY 2020-21 to FY 2024-25," Sebi's Whole Time Member Kamlesh Chandra Varshney said in the interim order.

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.

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 frombuying, selling or dealing in securities of REL, either directly or indirectly, until further orders. The order came after Sebi received a complaint in March 2024 from a REL shareholder, who alleged potential financial misrepresentation in the books with respect to a large sum of trade receivables outstanding for more than two years.

The present proceedings have emanated from an investigation conducted for the period from 1 April 2020, to 31 March, 2024.