Rajesh Jasvantrai Mehta, the founder and executive chairman of Rajesh Exports, presents a complex track record as a promoter, with significant business achievements overshadowed by mounting governance concerns and alleged questionable practices.
Business Achievements and Track Record
Mehta's entrepreneurial journey began with remarkable success from humble origins. Starting with a loan of just Rs 1,200 from his brother in the late 1980s, he built Rajesh Exports from a garage-based operation in Bangalore's RT Nagar into a Fortune 500 company[1][2]. The company achieved several notable milestones under his leadership, including establishing India's first organized gold jewelry manufacturing facility in 1989 and the country's first jewelry R&D facility in 1991[1]. Rajesh Exports now processes 35% of the world's gold and acquired Valcambi, the world's largest gold refining facility in Switzerland, in 2015[1].
As of 2017, Forbes estimated Mehta's net worth at $2.6 billion, making him the 61st richest person in India[1]. The company expanded internationally, exporting to the UK, Dubai, Oman, Kuwait, the US, and Europe, growing from INR 20 million in 1992 to INR 1.2 billion by 1998[1].
Serious Governance and Compliance Concerns
However, Mehta's track record as a promoter has been increasingly marred by numerous red flags and alleged fraudulent practices. The company has faced multiple compliance-related issues, including repeated instances of missing or filing incorrect critical documents while publishing quarterly results, as required by SEBI[3][4].
Financial Irregularities: Several concerning patterns have emerged in the company's financial reporting. The company's high trade receivables balance raises questions about the conversion of sales into cash and their authenticity[3]. Consolidated sales of Rs 2,80,676 crore show more than 90% coming from outside India through a subsidiary that was not audited and whose financials are unavailable on the company's website[3].
Suspicious Employee Compensation: The remuneration structure appears highly irregular, with employee benefit expenses of Rs 215 crore for 141 employees, averaging Rs 1.5 crore per employee annually, while Mehta's own salary and that of top officials stood at merely 4-5 lakh per annum[3].
Related Party Transactions: The company has numerous undisclosed related party transactions without proper explanations[3]. In 2023, the National Stock Exchange sought clarification from Rajesh Exports for failing to disclose its cash-flow statement for FY23, and the company neglected to disclose half-year cash-flow statements and proper audit reports[4].
Legal and Regulatory Issues
Mehta's track record includes serious legal troubles. In 2013, a non-bailable arrest warrant was issued against his brother and co-MD Prashant Mehta in connection with a case alleging the sale of gold jewelry meant for export in the domestic market[4]. In November 2023, Brickwork rating company cited non-cooperation by the company[3].
Banking Disputes: There is pending litigation with their sole banking partner, Canara Bank, concerning payables and receivables[3].
Market Performance and Investor Confidence
The company's stock performance reflects these concerns, with shares plummeting over 50% in the past year and falling 67% from their February 2023 peak of Rs 946.85[4]. The market capitalization declined by almost 65% in one financial year, dropping from Rs 1,030 to Rs 351[5]. Despite these issues, the company has provided no investor communication, with the last conference call dating back to February 2019[3].
Assessment of Fraudulent Activities
While direct proof of fraud requires legal determination, the evidence suggests a pattern of questionable practices that raise serious concerns about Mehta's integrity as a promoter. The combination of financial irregularities, disclosure lapses, suspicious compensation structures, undisclosed related party transactions, and lack of transparency creates a compelling case for potential fraudulent activities. The company's value destruction of nearly 70% since its peak, coupled with institutional concerns and regulatory scrutiny, indicates that investors and market participants have lost confidence in Mehta's leadership and the company's financial integrity[4][5].
The track record suggests that while Mehta demonstrated entrepreneurial success in building the business initially, his recent conduct as a promoter has been characterized by alleged governance failures and practices that appear designed to mislead stakeholders and potentially defraud the company and its investors.
[1] https://en.wikipedia.org/wiki/Rajesh_Mehta
[2] https://www.linkedin.com/posts/truth-dares-and-stories-4626b22a8_rajeshmehta-rajeshexports-jewellerybusiness-activity-7208683319650054145-FVZh
[3] https://www.linkedin.com/posts/nishant-kumar-25aa83209_covering-something-valuable-on-linkedin-activity-7237112255698325508-LPsD
[4] https://www.moneycontrol.com/news/business/stocks/lic-maintains-10-stake-in-rajesh-exports-despite-nearly-70-stock-fall-in-last-14-months-12575991.html
[5] https://www.thecore.in/finance/behind-the-falling-credibility-of-rajesh-exports-gold-empire-2404011
[6] https://www.marketscreener.com/insider/RAJESH-JASVANTRAI-MEHTA-A0CGF2/
[7] https://www.marketsmojo.com/news/stocks-in-action/who-are-the-top-shareholders-of-the-rajesh-exports-2784400
[8] https://economictimes.com/magazines/panache/staying-grounded-this-family-run-business-joins-fortune-500club-celebrates-with-simple-south-indian-meal/articleshow/53627113.cms
[9] https://forum.valuepickr.com/t/rajesh-exports-time-to-examine-this-story-seriously/390?page=5
[10] https://indiankanoon.org/doc/70138298/
[11] https://www.procapitas.com/news/stocks/lic-holds-steady-amid-rajesh-exports-turmoil-todays-news
[12] https://rajeshexportsindiablog.wordpress.com
[13] https://wcrcleaders.com/the-gold-visionary-rajesh-mehtas-journey-from-small-time-trader-to-global-magnate/
[14] https://en.wikipedia.org/wiki/Rajesh_Exports
[15] https://aboutrajeshmehtarajeshexports.wordpress.com/2015/05/14/rajesh-exports-limited-history-story-of-becoming-largest-gold-exporter/
[16] https://www.business-standard.com/article/current-affairs/rajesh-mehta-of-swastik-overseas-held-over-nsel-scam-114050300167_1.html
[17] https://forum.valuepickr.com/t/request-for-information-on-indian-companies-involved-in-accounting-fraud/136186
[18] https://www.reddit.com/r/IndianStockMarket/comments/1i7ywke/is_lab_grown_diamonds_are_the_real_reason_for/
[19] https://www.business-standard.com/article/companies/non-bailable-warrant-issued-against-rajesh-exports-md-113100800926_1.html
[20] https://economictimes.com/rajesh-exports-blames-mcx-for-account-misuse/articleshow/23477981.cms