Shares of Rajesh Exports declined 5 percent and hit the lower circuit on June 25 after the Enforcement Directorate (ED) disclosed findings from its ongoing investigation into the company, raising concerns over multiple financial and governance-related issues.

According to the ED, searches conducted at multiple locations in Bengaluru and Mumbai revealed suspected violations under the Foreign Exchange Management Act (FEMA). Investigators found missing records related to foreign transactions, opaque trade payable and receivable adjustments involving overseas entities, and discrepancies in stock records. The agency is also examining suspected share price manipulation through block trades.

The probe further highlighted unusual remuneration practices within the company's top management. Investigators questioned salary disclosures, including reports that the managing director received a nominal monthly salary while the chief financial officer had reportedly not drawn a salary for several years despite the company's large reported revenues.

The ED's investigation follows an earlier interim order by the Securities and Exchange Board of India (SEBI), which alleged that Rajesh Exports misrepresented consolidated revenues and identified other governance-related irregularities. Separately, the Serious Fraud Investigation Office (SFIO) is also expected to initiate a probe into the company based on SEBI's findings.

Rajesh Exports has denied the allegations and maintained that its financial disclosures are accurate. The company has stated that it will contest the regulatory findings through appropriate legal channels.