Shares of Rajesh Exports hit the five percent [1] lower circuit for a third consecutive trading session on Monday following a SEBI investigation.
The crash reflects investor alarm over an interim order from the Securities and Exchange Board of India (SEBI) that alleges systemic financial irregularities. If the findings are upheld, they suggest the company's reported financial health was largely fabricated.
SEBI's interim order alleges that the company routed funds through personal and promoter-linked accounts without proper disclosure [2]. More critically, the regulator alleges that between 97 percent and 99 percent [2] of the company's reported revenue may have been inflated.
Trading activity on the National Stock Exchange and Bombay Stock Exchange saw the stock locked at Rs 94.50 [1]. The shares fell approximately 10 percent [2] over the previous two days before hitting the five percent [3] lower circuit again on Monday.
Rajesh Exports responded to the regulatory action by attributing the situation to a communication gap [2]. The company disputes the allegations of financial misconduct and revenue inflation.
The lower-circuit limit is a regulatory mechanism that halts trading when a stock price drops too quickly, preventing a total collapse in a single session. The continued slide indicates a lack of buyer confidence as the market processes the scale of the SEBI allegations.
“97-99% of reported revenue may have been inflated”
This development signals a severe crisis of credibility for Rajesh Exports. The allegation that nearly all reported revenue was inflated suggests a potential accounting fraud of massive proportions, which typically leads to prolonged regulatory battles, heavy fines, and a permanent loss of investor trust in the company's governance.
