Cross-Holdings, Fund Transfers, Gold Mine Claims: Sebi's Concerns Over Rajesh Exports
· Free Press Journal
Rajesh Exports has come under scrutiny from the Securities and Exchange Board of India (Sebi) over its investment disclosures, with the regulator flagging two separate issues — an unverified claim related to "gold mines in Africa" and transactions involving electric vehicle company Elest Pvt Ltd, a promoter-linked entity.
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In its interim order dated June 3, Sebi said Rajesh Exports’ "other non-current investments" on a consolidated basis increased from Rs 879.60 crore in FY21 to Rs 1,035.27 crore in FY23 before surging to Rs 10,547.72 crore in FY25.
The National Stock Exchange (NSE) had sought details regarding the Rs 1,035.27 crore reported under "other non-current investments" as of March 31, 2023.
According to Sebi, Rajesh Exports informed the exchange in July 2024 that the amount represented an "investment in gold mines in Africa."
Rajesh Exports Audit Under Scrutiny Over Rs 15 Lakh Crore MisreportingHowever, the regulator said it could not verify this claim using the company’s financial statements or other available records.
Sebi examined the standalone financial statements of Rajesh Exports and those of its subsidiaries, REL Singapore and Global Gold Refineries AG, but found no identifiable investment corresponding to gold mines in Africa.
In its response, Rajesh Exports said it was unable to locate its earlier submission to the exchange due to the absence of date details. The company maintained that investments in gold mines existed through foreign subsidiaries and that the reported figures were accurate.
Sebi, however, stated that merely claiming such investments existed through foreign subsidiaries, without providing a traceable linkage in financial statements or supporting documentation, did not adequately explain the disclosure.
Elest Transactions Raise Governance Concerns
Sebi also examined transactions involving Elest Pvt Ltd, which was incorporated in October 2020 by Rajesh Mehta and Prashant Mehta. The company operates in the manufacturing of lithium-ion cells, battery packs and electric vehicles.
Since Rajesh Mehta served as a common director and exercised substantial ownership and control over Elest, Sebi classified it as a related party of Rajesh Exports.
According to the regulator, Rajesh Exports transferred Rs 565.88 crore to Elest between FY21 and FY26, while Elest transferred Rs 350.03 crore back to Rajesh Exports, resulting in a net outflow of Rs 215.85 crore from Rajesh Exports.
Sebi said these transactions were not adequately disclosed as related-party dealings.
Cross-Holding Structure Under Investigation
The regulator also highlighted transactions involving ACC Energy Storage Pvt Ltd, Rajesh Exports’ energy storage subsidiary.
On January 1, 2025, Rajesh Exports acquired an additional 2.55 crore shares in ACC Energy at Rs 60 per share, while Elest subscribed to 2.45 crore shares at the same valuation.
Following the transaction, Rajesh Exports’ stake in ACC Energy fell from 100% to about 51.05%, while Elest’s holding increased to approximately 48.95%.
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The regulator also noted that Rajesh Exports Managing Director Suresh Gowda and Chief Financial Officer Vijendra Rao stated during depositions that they were unaware of Elest’s Rs 147 crore investment in ACC Energy and a subsequent Rs 262 crore investment by ACC Energy in Elest.
According to Sebi, these transactions raised concerns regarding potential fund diversion, routing of funds, non-transparent related-party arrangements, lack of adequate approvals and shortcomings in disclosures to shareholders and investors.
The regulator added that the cross-holding arrangement diluted Rajesh Exports’ stake in ACC Energy and resulted in the transfer of nearly 48.95% ownership in ACC Energy to Elest, an entity substantially owned and controlled by Rajesh Mehta.
Sebi said it had issued multiple summons seeking an explanation for the investments involving Elest. While Rajesh Exports submitted responses on March 17, 2026, the regulator said these require detailed examination and independent verification, which remains ongoing.
In a statement filed with stock exchanges on June 4, Rajesh Exports said the order was interim in nature and that Sebi had not reached any adverse conclusion.
The company maintained that its reported revenues were accurate and that there was "no overstatement of revenues." It added that there appeared to be "some type of communication gap and confusion" between Sebi and the company.
Rajesh Exports said it is in the process of providing all relevant documents and clarifications to the regulator and expressed confidence that Sebi would reach the correct conclusion after reviewing the submitted records.