Disclosure cloud over Rajesh Exports

Bengaluru-based Rajesh Exports Ltd (REL) and its crucial Singapore subsidiary gave contradictory statements to regulators in the two countries, a Mint review of documents showed, blurring the actual finances of overseas units that account for nearly all of its consolidated revenues.

- Nehal Chaliawala & Varun Sood

These statements are at the core of the charges of financial misreporting and revenue inflation that the Securities and Exchange Board of India (Sebi) has levelled against the company in its 3 June interim order.

According to the 3 June interim order, Rajesh Exports claimed it could not disclose the standalone financial statements of all its overseas subsidiaries, since the Singapore subsidiary—REL Singapore Pte Ltd—had consolidated and shared them. “REL further stated that the audited financial statements of the step-down subsidiaries were first consolidated at the level of REL Singapore and thereafter forwarded to REL for preparation of the final consolidated financial statements,” Sebi said.

However, the same Singapore subsidiary had got an exemption from local regulators from filing consolidated financials, stating that the aggregation will be done by Rajesh Exports in India. It filed its standalone financial statements only in Singapore, withholding the financials of other step-down subsidiaries of Rajesh Exports.

“The company is exempted from the preparation of consolidated financial statements as the consolidated financial statements are prepared by the company’s ultimate holding company, Rajesh Exports Limited, where the consolidated financial statements are available for public use,” the Singapore unit said in regulatory filings in fiscal year 2024 (FY24) and FY25, according to a Mint review of the financials.