Sebi's's Rs 15 lakh crore question: What went wrong at Rajesh Exports?

Key points

• When the Securities and Exchange Board of India (Sebi) passed a 109-page interim order against Rajesh Exports Ltd (REL), it did much more than merely flag accounting irregularities.
• The market regulator effectively questioned whether a substantial part of the company's reported business activity over several years was genuine and whether investors had been given a misleading picture of the company's financial health.
• At the heart of the order lies an extraordinary allegation.
• Sebi has prima facie found that approximately 97% to 99% of the company's consolidated revenue appears inflated and unsupported by verifiable records.
• In simple terms, the regulator is questioning whether revenues running into several lakh crore rupees that were reported to investors actually had sufficient documentary backing.