'Zero diversion of funds': Rajesh Exports chief counters Sebi findings on ACC Energy dealings
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Rajesh Exports chairman Rajesh Mehta on Tuesday denied any fund diversion in its subsidiary ACC Energy and promoter-controlled Elest Ltd, saying Sebi has not understood the accounting entries, even as the company faces potential removal from the ₹18,100-crore ACC Production-Linked Incentive scheme.
"First of all, the Sebi has made observations. That has to be put in the right place first. Point number two, there is zero diversion of funds. They have not understood the accounting entries," the Rajesh Exports founder told PTI.
The company is ready to clarify, he added.
The market regulator's June 3 interim order flagged a circular fund-routing scheme involving ACC Energy Storage and promoter-controlled Elest Pvt Ltd. After Elest acquired 49% of ACC Energy in January 2025, it gave ₹147 crore to the subsidiary, which returned ₹112 crore on the same day. ACC Energy Storage also invested ₹262 crore in Elest without disclosing valuation details.
The company's MD and CFO admitted that they were unaware of the transactions, according to the order.
Sebi concluded that the cross-holding arrangement diluted Rajesh Exports Ltd's (REL) stake in ACC Energy from 100% to 51.05%, alienating 48.95% to Elest as a "device, scheme and artifice to mislead investors", violating related-party disclosure rules and constituting fraudulent trade practices.
The ACC Energy-Elest irregularity is part of Sebi's broader 109-page order alleging ₹15.15 lakh crore in misreported subsidiary revenues -- representing 99.8% of such revenues -- between FY21 and FY25. The regulator has barred Mehta from trading in REL shares and ordered a forensic audit.
The allegations have also put at risk the company's participation in the ₹18,100-crore Advanced Chemistry Cell (ACC) Production-Linked Incentive (PLI) scheme.
The Ministry of Heavy Industries (MHI) is reviewing the situation and preparing to take a final call on the company's disqualification from the flagship battery manufacturing programme.
On the PLI project, Mehta said there has been "fair progress" in its implementation and the company has sought a one-year extension, citing R&D delays.
"We are coming out with one of the finest and absolutely 100% home-grown innovative battery cells. It is not there anywhere in the world. So, the research and development is taking some time," he said.
The ACC battery plant coming up in Hubli, Karnataka, is 60-65% complete, Mehta said, adding that the company has given its explanation to MHI on the delay in execution.
"I would not say 100% work has been done, but there has been good satisfactory progress," he said.
The original deadline for implementation of the project was the end of 2025.
(Except for the headline, Fortune India has not edited the content of this PTI report.)