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Informist, Tuesday, Jul. 7, 2026

--NFRA chairperson: Started statutory auditors probe in Rajesh Exports case

By Rajesh Gajra

MUMBAI - The National Financial Reporting Authority has started the process to investigate the role of statutory auditors of Rajesh Exports Ltd., its chairman Nitin Gupta said on the sidelines of a conference on governance organised by the Federation of Indian Chambers of Commerce and Industry in Mumbai on Tuesday. The Securities and Exchange Board of India had, in its Jun. 3 interim order against Rajesh Exports and its promoter and executive chairman Rajesh Mehta, said it will ask the NFRA to take appropriate actions against the statutory auditors of Rajesh Exports "looking at the prima facie misconduct and dereliction of duties on the part of the statutory auditors."

Gupta said it was hard to give a timeline for completion of the investigation. He said any regulator has to act when such a case occurs despite having the guardrails in place to check it. Whatever actions need to be taken under NFRA's regulatory ambit will be taken, Gupta said.

The lack of disclosure of audited financial statements of a step-down subsidiary of Rajesh Exports was at the heart of SEBI's case against the company. It led to SEBI's main allegation that the company substantially and fraudulently misrepresented its financial health at a consolidated level by inflating revenues, and distorted trade receivables, trade payables, and other assets.

SEBI had alleged in its interim order that the conduct of Rajesh Exports' statutory auditors P V Ramana Reddy & Co. and BSD & Co. warranted scrutiny. When deposing before SEBI during the preliminary investigation, these auditors had told the regulator that they would provide missing financial statements of the subsidiary and their complete audit working papers. But as of Jun. 3, SEBI had not received these documents "indicating a lack of cooperation with the investigatory process."

The NFRA's investigation on statutory auditors of IndusInd Bank Ltd. are ongoing, Gupta said. "It is not just one auditor, there are multiple auditors," that the regulatory agency is looking at in the investigation, he said.

The NFRA had given its suggestions on changes in auditing standards to the Ministry of Corporate Affairs in late 2024, according to Gupta. These are currently under consideration of the ministry, he said.

At 1342 IST, shares of Rajesh Exports were 0.2% higher at INR 97.20 on the National Stock Exchange.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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