Rajesh Exports shares hit 5% lower circuit limit after 41% rally in 7 sessions; here's why

Rajesh Exports Ltd hit its 5 per cent lower circuit limit in Wednesday's trade amid ED searches at nine of its premises in Bengaluru and Mumbai. The stock was locked at its lower circuit limit at Rs 102.85 apiece. This scrip had hit its upper circuit limit for seven straight sessions. 
As per sources, searches relate to trade receivables worth Rs 3,000 crore that were set off against gold imports, the delivery of which is under suspicion. Also, it is alleged that trade receivables and payables were set off against fou-five foreign entities with dubious credentials. Besides, Rajesh Exports allegedly invested more than Rs 1,000 crore in African gold mines but the investment was not reflected in the books of account of any of its subsidiaries.

As per sources, physical stock of gold was found to be 40 per cent lower than that declared in books. Investigation revealed multiple transactions of Rajesh Exports Ltd shares by benamidar. Over $20 million was siphoned out of the country, they suggested.

The stock was in news earlier this month following a SEBI order after the markets regulator suspected mis-reporting of  Rs 15.15 lakh crore revenue, nearly entire revenue over a five-year period. As per SEBI, Rajesh Exports diverted company funds without the required approvals and disclosures. Rajesh Exports shares have lost 52 per cent of their market value in the past six months.

Rajesh Exports suggested that the entire matter was a result of confusion and communication gap, which the company is in the process of addressing with SEBI.

SEBI has barred Rajesh Exports and its promoter Rajesh Mehta from accessing the securities market until the completion of its investigation. According to Sebi, around 97–99 per cent of Rajesh Exports' consolidated revenue originated from its overseas subsidiaries, particularly Switzerland-based Valcambi SA. However, the company allegedly failed to disclose the financial statements of its subsidiaries in the public domain on a consistent basis, SEBI said.