The Securities and Exchange Board of India’s (SEBI) interim order against Rajesh Exports has put the company’s statutory auditors, audit committee and board under the scanner, raising questions on the failure to independently verify overseas subsidiary revenues is as significant as the ₹15.15 lakh crore misrepresentation allegation, and that the case may carry implications well beyond securities law.
Statutory auditors BSD & Co. and P.V. Ramana Reddy & Co., who had signed off on the company’s accounts between FY21 and FY24 have been referred for their conduct to the National Financial Reporting Authority (NFRA). Both auditors undertook during depositions to provide missing subsidiary financial statements and audit working papers, but had not done so as of the date of the order.
“The most important aspect is the verification failure,” said Soumya Singh, Co-Founding Partner at Thistle & Law. “Where most of the consolidated revenue depends on overseas subsidiaries, the board, audit committee and auditors have a higher responsibility to ensure that the numbers are not just consolidated mechanically, but are capable of independent verification.”
The group audit process has broken down fundamentally, with multiple inconsistencies in how revenues were consolidated, a senior auditor said. The intermediate Swiss holding entity GGR, through which Valcambi SA’s revenues flowed into Rajesh Exports’ consolidated accounts, did not have a statutory audit.
While Rajesh Exports said the audited financial statements of step-down subsidiaries were first consolidated at its Singapore subsidiary before being incorporated into the parent company’s accounts, the Singapore entity’s own annual reports stated that it prepared only standalone financial statements and was exempt from preparing consolidated accounts.
Amit Tungare, Managing Partner at Asahi Legal, said the findings raised fundamental questions about fiduciary oversight. “If 97 to 99 per cent of the company’s revenue reportedly originates from overseas subsidiaries like Valcambi, and those numbers cannot be tallied, what exact data was the audit committee relying on to sign off on the financials? It suggests a potential rubber-stamp culture where independent verification was either fundamentally flawed or entirely absent,” he said.
“The expectation today is that boards must have access to independent verification mechanisms, periodic audits, transaction-level visibility and effective risk reporting systems,” said Tushar Agarwal, Founder and Managing Partner of C.L.A.P. JURIS.
Further, SEBI found that corporate funds aggregating to ₹338.90 crore were routed through the personal bank account of promoter-chairman Rajesh Mehta, for which the company failed to furnish board or audit committee approvals.
Alay Razvi, Managing Partner at Accord Juris said, “The allegation that company funds were routed through the promoter’s personal bank accounts could trigger PMLA proceedings, creating compounding legal exposure well beyond SEBI’s civil penalties,” he said. “The precedent of past IPO irregularities by Rajesh Mehta raises concerns about recurring governance culture rather than isolated accounting errors,’ he said.
Published on June 7, 2026
