Rajesh Exports Ltd. has said that the alleged revenue misrepresentation of Rs 15.15 lakh crore is a result of “miscommunication” and “confusion” by the Securities and Exchange Board of India.
The company clarified through an regulatory filing on Thursday that “no conclusive adverse findings of any kind have been reported by SEBI,” adding that this has been established since no fine, penalty or any other coercive action has been taken by the market regulator.
“The Company emphatically states that it has done no wrong and all the reporting of the Company with regard to it’s financials has been correct. The revenues stated by the Company in it’s Financials are correct,” the filing stated.
Further it explained that the core observation with regards to a revenue misrepresentation has emerged primarily due to “confusion”.
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According to the company’s clarification, SEBI has considered the EBITDA (earnings before interest, taxes, depreciation and amortisation) of its Switzerland-based subsidiary Valcambi, in lieu of the Rajesh Export’s Revenue, and has therefore marked a difference of about 97% in the revenue.
“The entire matter is a result of confusion and communication gap, which the company is in the process of addressing:with SEBI and the company is confident that it will be able to clarify the matter with SEBI by presenting all the required and relevant documents,” the filing underlined.
It reiterated that SEBI has not made adverse observations with regard to the earnings of the company, it has only observed suspicion with regard to Revenues “which is primarily because of confusion with regard to the Revenues of Valcambi.”
Lastly, Rajesh Exports emphasised that inflating the revenue for a publicly listed company will be adverse to the company as it will shrink its margins, therefore ruling out any reason for doing so.
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Rajesh Exports’ Quandary
In its 109-page interim order, SEBI said its initial investigation found signs that Rajesh Exports exaggerated nearly all of its reported sales, with around 97-99% of its revenue potentially being inflated.
“The aberrations prima facie noted in the matter, where approximately 97% to 99% of the revenue of the company is inflated, are egregious and unheard of,” the order stated. Subsequently, the market regulator barred Rajesh Mehta from dealing in shares of Rajesh Exports.
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