Summary of this article
Rajesh Exports hits lower circuit as ED probe flags FEMA violations and several irregularities
Investigators allege missing records, inventory mismatch and unusual salary patterns
Stock under pressure since Sebi order earlier this month
Rajesh Exports shares were locked at the 5 per cent lower circuit on June 25 as fresh regulatory action and investigation reports hit investor sentiment. The stock slipped to Rs 97.02 on the NSE in early trade, its second straight session of hitting the lower circuit.
The stock had surged over 40 per cent in the past week across seven trading sessions, but the gains quickly reversed as concerns over compliance issues started weighing on sentiment.
ED Raid Triggers Fresh Wave Of Concerns
The pressure on the stock intensified after the Enforcement Directorate (ED) carried out search operations at nine locations linked to the company and its associates under the Foreign Exchange Management Act (FEMA). The agency has since flagged a series of alleged irregularities, including possible share price manipulation, gaps in transaction records and questionable foreign exchange dealings.
Among the key concerns highlighted by investigators is the absence of proper documentation for overseas transactions and investments. The ED also said that there is a mismatch in gold inventory records, which it estimates at around 40 per cent, raising questions over the company’s internal accounting practices.
In addition, the agency has reportedly indicated that about $20 million may have been diverted, though details around the alleged flow of funds are still under examination.
Salary Structure And Governance Under Lens
The probe has also drawn attention to unusual remuneration patterns within the company. According to findings shared by the ED, the Chief Financial Officer has not drawn any salary since 2020, while the Managing Director reportedly receives a monthly pay of around Rs 17,000, even as the company reported large-scale revenues in its consolidated accounts.
These disclosures have added to concerns around corporate governance and internal financial controls at the firm.
Separately, reports suggest that the Ministry of Corporate Affairs may have directed the Serious Fraud Investigation Office (SFIO) to examine the matter further. The proposed probe is expected to look into allegations already flagged by the market regulator.
Sebi Findings And Exchange Query Add Pressure
ED’s raid comes after Securities and Exchange Board of India’s (Sebi) interim order earlier this month, which alleged that Rajesh Exports had overstated consolidated revenues over a multi-year period by routing significant figures through its overseas subsidiary, including Switzerland-based Valcambi SA.
Following the order, Sebi also restricted the company’s promoter from dealing in the firm’s securities until further notice.
Meanwhile, stock exchanges have sought clarification from the company regarding the ED searches and related reports, adding another layer of regulatory scrutiny.
According to exchange data, Rajesh Exports has fallen over 77 per cent in the last 10 years and nearly 83 per cent over five years. It is also down more than 45 per cent on a year-to-date basis.
Despite the recent brief rally, the latest developments have once again turned sentiment negative, with investors now watching closely for further regulatory action and updates from investigative agencies.
