Explained: SEBI's allegations of ₹15 lakh crore inflated revenue against Rajesh Exports

Rajesh Exports Limited (REL), a listed gold refiner and holding entity of SHUBH Jewellers, appears to have misrepresented its revenues during a five year-period from FY 2020-21 till FY 2024-25 to project an inflated ₹15.44 lakh crore cumulative revenue, the Securities and Exchange Board of India (SEBI) recently said..The SEBI made the observation in an order restraining Rajesh Exports promoter and Executive Chairman Rajesh Mehta from buying, selling or dealing in the securities of the company until further orders.In an interim order passed on June 3, SEBI Whole Time Member Kamlesh Chandra Varshney noted that a large part of Rajesh Exports' revenues were attributed to its subsidiaries overseas. However, on examination of available records, the SEBI found that a Switzerland-based subsidiary, portrayed as driving the bulk of REL's operations, produced revenues that were much less than projected.The mismatch alleged by the SEBI has been pegged at ₹15.15 lakh crore.The SEBI noted that this misrepresented amount represented about 99.80 percent of the revenue attributed by Rajesh Exports to its subsidiaries during a five year period."REL has prima facie misrepresented approximately INR 15,15,385 crore i.e. representing 99.80% of its revenues which are attributed to subsidiaries during the period FY 2020-21 to FY 2024-25. The aforesaid conduct appears to have prima facie enabled REL to portray an inflated and misleading picture of its operational scale, consolidated financial position and financial health before investors and the securities market," the order said. SEBI termed these discrepancies egregious.“The aberrations prima facie noted in the matter - where approx. 97% to 99% of the revenue of the Company is inflated - are egregious and unheard of.".The proceedings arose from a shareholder complaint received by SEBI on March 11, 2024. The complaint alleged potential financial misrepresentation in the books of Rajesh Exports with respect to large trade receivables outstanding for more than two years.Rajesh Exports is a publicly listed company engaged in gold refining and the manufacture of gold products. It exports its products to various countries and also sells them in wholesale and retail in India through its own retail showrooms under the brand name SHUBH Jewellers.SEBI noted that as on June 3, 2026, Rajesh Exports had a market capitalisation of ₹3,210 crore. Its shares are listed on the Bombay Stock Exchange and the National Stock Exchange..A major part of SEBI’s order dealt with the company’s overseas subsidiaries and step-down subsidiaries, particularly Switzerland-based Valcambi SA and Global Gold Refineries AG (GGR).SEBI found that nearly the entire consolidated revenue of Rajesh Exports was attributed to its overseas subsidiaries and step-down subsidiaries. However, the company allegedly failed to provide underlying financial statements, party-wise details of customers and vendors, purchase registers, sales registers and other transaction-level data..According to SEBI, Valcambi SA was projected as the principal operating entity of the group. However, the standalone revenue of Valcambi SA was only ₹542.68 crore in calendar year 2023. In contrast, GGR reported consolidated revenue of about ₹2.92 lakh crore (₹2,92,713.71) and Rajesh Exports reported consolidated revenue of about ₹2.80 lakh (₹2,80,676.35) crore."It is observed that the standalone revenues of Valcambi SA constituted less than 0.50% of the consolidated revenues reported by GGR and REL, which appears fundamentally inconsistent with REL’s repeated assertion that Valcambi SA was the principal operating entity driving the group’s revenues and the fact that GGR is holding company and is not having any day to day operations," the SEBI order said.Rajesh Exports claimed, in turn, that Valcambi SA accounted only for “processing revenues” or “value addition” whereas GGR recognized the gross value of gold transactions together with processing charges.SEBI, however, said that this explanation appeared untenable, commercially implausible and unsupported by verifiable records..The regulator also rejected Rajesh Exports’ claim that Swiss data protection law prevented it from sharing information relating to Valcambi. SEBI said that Swiss law only protected personal data of natural persons and could not be used to withhold corporate financial information from an Indian securities regulator..The SEBI went on to observe that investors were shown consolidated financial figures without being given any means to verify the underlying numbers of the subsidiaries.“This has created a severe information asymmetry, keeping the public investors and shareholders in the dark regarding the true financial position of REL’s consolidated operations and the veracity of its reported performance,” the order said.The order also recorded allegations of non-cooperation by Rajesh Exports and Mehta. SEBI said that the company failed to give the forensic auditor access to its ERP systems, books of accounts and journal dump. The forensic auditor could verify only 35.07 percent of sales samples worth ₹12,217.15 crore with complete documentation..SEBI also found that ₹7.45 crore was transferred by Rajesh Exports to Mehta, who used the funds for trading in gold derivatives through his personal account. After losses of ₹3.50 crore, ₹3.91 crore was transferred back to the company.SEBI noted that Mehta was actively involved in the affairs and financial operations of Rajesh Exports and its subsidiaries. The order recorded that Managing Director Suresh Gowda had told SEBI that overseas subsidiaries and step-down subsidiaries were exclusively handled by Mehta..In light of the above, SEBI proceeded to direct Rajesh Exports and Mehta to cooperate with its investigation in the matter and furnish documents within 30 days. It also ordered a fresh forensic audit and forwarded the order to the National Financial Reporting Authority for appropriate action, if any, against the statutory auditors of Rajesh Exports.Rajesh Exports and Mehta have been given 21 days to file objections and seek a personal hearing..[Read Order]