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What is the story about?
Market regulator Securities & Exchange Board of India (SEBI) passed an interim order in the matter of Rajesh Exports Ltd. on Wednesday, June 3, following an investigation that lasted between April 1, 2020 and March 31, 2024.
The investigation was triggered after a shareholder complaint against alleged financial misrepresentation.
Here are the key highlights from the order:
The order has asked Rajesh Exports and its owner Rajesh Mehta to fully co-operate with the investigation, produce documents and reply to explanations sought by the regulator within 30 days.
Rajesh Exports and Rajesh Mehta have also been ordered to co-operate with a newly appointed forensic auditor.
The company's promoter, Rajesh Mehta, has been restrained from buying, selling or dealing in shares of the company, directly, or indirectly, until further orders.
The company has been asked by SEBI to make true and fair disclosures of financial statements, related party transactions carried out by them, and also to make other mandatory disclosures under SEBI's LODR regulations.
Rajesh Exports has been accused of financial misrepresentation, disclosure failures, improper accounting treatment and diversion of funds.
SEBI found Prima Facie that Rajesh Mehta, the promoter, Executive Chairman, Director and Audit Committee Member at the company, exercised substantial operational & financial control over Rajesh Exports & its subsidiaries, and was directly connected with several questioned transactions.
SEBI alleges that Rajesh Exports refused access to systems and books of account, did not provide journal dumps, refused to provide detailed, subsidiary level records, provided incomplete ledgers with missing narration details, failed to provide supporting documents for large transaction samples, and co-operated only partially with the forensic auditor, restricting verification significantly.
SEBI viewed this as a deliberate attempt to obstruct verification of financial disclosures.
Rajesh Exports did not upload audited financial statements of subsidiaries and step-down subsidiaries on its website.
The entities for which statements were missing included Rajesh Exports Singapore, Global Gold Refineries AG (GGR), Valcambi SA, Bab Al Rayan Jewellery LLC, ACC Energy Storage Pvt. Ltd.
The company also failed to provide customer-wise, vendor-wise and debtor/creditor information of overseas subsidiaries despite repeated summons.
SEBI cited its concerns in this matter as 97% to 99% of the company's consolidated revenue came from its overseas subsidiaries.
Rajesh Exports reported consolidated revenue of around ₹15.45 lakh crore between financial year 2021 to financial year 2025.
However, SEBI found that the key operating subsidiary, Valcambi SA, reported only a fraction of those revenues in its audited standalone accounts.
Additionally, GGR, a holding company with no meaningful operations, also reported extraordinarily high unaudited revenue.
SEBI concluded in this regard that nearly ₹15.15 lakh crore of revenue attributed to subsidiaries was misrepresented and that amounts to nearly 99.8% of the company's consolidated revenue reported during this period.
Rajesh Exports recorded sales of ₹11,487 crore, and purchases of ₹11,488 crore with Affluence Shares and Stocks Pvt. Ltd. between financial year 2022 and 2024. These transactions amount to 66% of standalone sales and 67% of standalone purchases.
In turn, Affluence informed the regulator that Rajesh Exports was never its client and that no agreement existed with the company, adding that no transactions were executed with the company at all.
Instead, Affluence dealt only with Rajesh Mehta on a personal level. Rajesh Mehta traded gold derivatives through his personal account and that funds of Rajesh Exports were routed through him to finance these trades.
SEBI has alleged that Rajesh Exports inflated revenue by including forex fluctuations in revenue and purchases instead of separately accounting for them. This includes a sum of ₹866 crore added to its revenue and ₹716 crore added to purchases.
The company also included interest earned from fixed deposits and mutual funds within "revenue from operations"
SEBI has also alleged in its order that Rajesh Exports failed to eliminate intra-group balances and incorrectly consolidated investments and liabilities.
This resulted in inflation of investments by ₹2,501 crore and trade payables by ₹1,456 crore, thereby allegedly overstating the group's balance sheet strength.
The regulator also found that Rajesh Exports artificially reduced old receivables, used opaque adjustments against payables and failed to properly disclose the nature of these adjustments, thereby misleading investors regarding the true financial position of the company.
SEBI has found that ₹339 crore were transferred from Rajesh Exports to Rajesh Mehta of which, only ₹232 crore were transferred back.
There were no board approvals, no audit committee approvals, no proper agreements or disclosures regarding the same.
SEBI specifically observed that Rajesh Exports admitted funds were routed through Rajesh Mehta's account "without revealing the originating bank account."
A sum of ₹566 crore was also transferred from Rajesh Exports to Elese Pvt. Ltd., of which only ₹350 crore were returned, resulting in a net outflow of ₹216 crore.
Despite this, Rajesh Exports disclosed only a small rental income transaction and major fund outflows were not properly disclosed.
Rajesh Exports had informed the NSE that ₹1,035 crore of other non-current investments, represented investment in Gold Mines in Africa.
When SEBI tried to verify the claim, it found no identifiable investment in African gold mines in the standalone financial statements of Rajesh Exports, and no identifiable investment in African gold mines in the financial statements of Global Gold Refineries AG (GGR).
The investigation was triggered after a shareholder complaint against alleged financial misrepresentation.
Here are the key highlights from the order:
Full Co-Operation
The order has asked Rajesh Exports and its owner Rajesh Mehta to fully co-operate with the investigation, produce documents and reply to explanations sought by the regulator within 30 days.
Rajesh Exports and Rajesh Mehta have also been ordered to co-operate with a newly appointed forensic auditor.
Rajesh Mehta Restrained
The company's promoter, Rajesh Mehta, has been restrained from buying, selling or dealing in shares of the company, directly, or indirectly, until further orders.
Order Against Rajesh Exports
The company has been asked by SEBI to make true and fair disclosures of financial statements, related party transactions carried out by them, and also to make other mandatory disclosures under SEBI's LODR regulations.
Entities Involved
Rajesh Exports has been accused of financial misrepresentation, disclosure failures, improper accounting treatment and diversion of funds.
SEBI found Prima Facie that Rajesh Mehta, the promoter, Executive Chairman, Director and Audit Committee Member at the company, exercised substantial operational & financial control over Rajesh Exports & its subsidiaries, and was directly connected with several questioned transactions.
What Does The SEBI order Against Rajesh Exports Allege?
SEBI alleges that Rajesh Exports refused access to systems and books of account, did not provide journal dumps, refused to provide detailed, subsidiary level records, provided incomplete ledgers with missing narration details, failed to provide supporting documents for large transaction samples, and co-operated only partially with the forensic auditor, restricting verification significantly.
SEBI viewed this as a deliberate attempt to obstruct verification of financial disclosures.
What Did SEBI Find In Its Rajesh Exports Investigation?
Rajesh Exports did not upload audited financial statements of subsidiaries and step-down subsidiaries on its website.
The entities for which statements were missing included Rajesh Exports Singapore, Global Gold Refineries AG (GGR), Valcambi SA, Bab Al Rayan Jewellery LLC, ACC Energy Storage Pvt. Ltd.
The company also failed to provide customer-wise, vendor-wise and debtor/creditor information of overseas subsidiaries despite repeated summons.
SEBI cited its concerns in this matter as 97% to 99% of the company's consolidated revenue came from its overseas subsidiaries.
What Is The Financial Misrepresentation Allegation Against Rajesh Exports?
Rajesh Exports reported consolidated revenue of around ₹15.45 lakh crore between financial year 2021 to financial year 2025.
However, SEBI found that the key operating subsidiary, Valcambi SA, reported only a fraction of those revenues in its audited standalone accounts.
Additionally, GGR, a holding company with no meaningful operations, also reported extraordinarily high unaudited revenue.
SEBI concluded in this regard that nearly ₹15.15 lakh crore of revenue attributed to subsidiaries was misrepresented and that amounts to nearly 99.8% of the company's consolidated revenue reported during this period.
What Are The Fictitious Transactions Reported By SEBI Against Rajesh Exports?
Rajesh Exports recorded sales of ₹11,487 crore, and purchases of ₹11,488 crore with Affluence Shares and Stocks Pvt. Ltd. between financial year 2022 and 2024. These transactions amount to 66% of standalone sales and 67% of standalone purchases.
In turn, Affluence informed the regulator that Rajesh Exports was never its client and that no agreement existed with the company, adding that no transactions were executed with the company at all.
Instead, Affluence dealt only with Rajesh Mehta on a personal level. Rajesh Mehta traded gold derivatives through his personal account and that funds of Rajesh Exports were routed through him to finance these trades.
Improper Accounting Treatment
SEBI has alleged that Rajesh Exports inflated revenue by including forex fluctuations in revenue and purchases instead of separately accounting for them. This includes a sum of ₹866 crore added to its revenue and ₹716 crore added to purchases.
The company also included interest earned from fixed deposits and mutual funds within "revenue from operations"
Incorrect Consolidated Accounts
SEBI has also alleged in its order that Rajesh Exports failed to eliminate intra-group balances and incorrectly consolidated investments and liabilities.
This resulted in inflation of investments by ₹2,501 crore and trade payables by ₹1,456 crore, thereby allegedly overstating the group's balance sheet strength.
The regulator also found that Rajesh Exports artificially reduced old receivables, used opaque adjustments against payables and failed to properly disclose the nature of these adjustments, thereby misleading investors regarding the true financial position of the company.
Misutilization & Rerouting of Funds
SEBI has found that ₹339 crore were transferred from Rajesh Exports to Rajesh Mehta of which, only ₹232 crore were transferred back.
There were no board approvals, no audit committee approvals, no proper agreements or disclosures regarding the same.
SEBI specifically observed that Rajesh Exports admitted funds were routed through Rajesh Mehta's account "without revealing the originating bank account."
A sum of ₹566 crore was also transferred from Rajesh Exports to Elese Pvt. Ltd., of which only ₹350 crore were returned, resulting in a net outflow of ₹216 crore.
Despite this, Rajesh Exports disclosed only a small rental income transaction and major fund outflows were not properly disclosed.
Wrongful Disclosures Around Gold Mine Investments
Rajesh Exports had informed the NSE that ₹1,035 crore of other non-current investments, represented investment in Gold Mines in Africa.
When SEBI tried to verify the claim, it found no identifiable investment in African gold mines in the standalone financial statements of Rajesh Exports, and no identifiable investment in African gold mines in the financial statements of Global Gold Refineries AG (GGR).
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