Rajesh Exports answers Sebi on ₹1,515,000-crore gap

What triggered the latest dispute

Rajesh Exports, a Bengaluru-based gold refiner and jewellery exporter, is contesting an interim ex-parte order issued by the Securities and Exchange Board of India (SEBI) on June 3. The regulator’s order alleges large-scale financial misrepresentation across five financial years and flags concerns around verification of overseas subsidiary records. The case has also pulled attention to transactions allegedly routed through promoter-linked channels, including personal accounts.

Chairman and Managing Director Rajesh Mehta has denied any fund diversion and said SEBI “has not understood the accounting entries”, according to his comments to PTI. The company has separately told stock exchanges that the order is interim in nature and does not contain conclusive adverse findings.

SEBI’s interim order and the headline allegation

SEBI’s interim order is described as a 109-page document and alleges that Rajesh Exports misrepresented consolidated revenues of about ₹1,515,000 crore between FY21 and FY25. Multiple reports cited by PTI and other outlets say the alleged discrepancy represents nearly the entirety of the company’s reported consolidated revenue for the period, with SEBI stating that a large share could not be verified through supporting documents and records.

SEBI has also stated that nearly all of the company’s consolidated revenue during FY21 to FY25 was reported from foreign subsidiaries, with the contribution ranging between 97% and 99% of total reported sales. The regulator’s order describes this as a key area requiring verifiable documentation at the subsidiary level.

Rajesh Mehta’s core defence: “zero diversion of funds”

Responding to questions on alleged fund diversion involving ACC Energy and promoter-controlled Elest Ltd, Mehta said there was “zero diversion of funds” and that SEBI had made observations that should be “put in the right place”. His argument is that the regulator has not correctly interpreted the relevant entries.

In remarks reported by PTI, he also rejected allegations of money being routed through personal accounts or promoter-linked entities. Mehta said no funds were taken by the promoter, and added that the company and its promoters are debt-free and have not pledged shares in the last 40 years.

The accounting dispute: EBITDA versus revenue

A central part of Rajesh Exports’ rebuttal is that SEBI’s alleged revenue inflation calculation arose from a basic accounting error. Mehta told PTI that the regulator had taken EBITDA figures and treated them as revenue. He described EBITDA as “gross profit” and said this misclassification led to the large five-year figure being cited.

In its clarification filing to BSE and NSE, the company similarly said the issue emerged “primarily due to confusion” because SEBI considered the EBITDA of Valcambi instead of revenue, which it said led to an apparent discrepancy of about 97%. The company maintained that its consolidated revenue, as stated in its filings, is correct.

What SEBI said about verification and overseas subsidiaries

SEBI’s interim order, as described in the reports, alleges that 97% to 99% of the company’s reported consolidated revenue came from foreign subsidiaries over multiple years. The regulator said it could not verify a substantial part of the reported consolidated revenue through documents and records produced during the investigation.

The order also noted mismatches when auditors examined records linked to Valcambi and other subsidiaries, leading SEBI to allege that consolidated group-level revenues were vastly higher than revenues that could be verified from subsidiary records.

Fund routing concerns raised in the order

Beyond the revenue question, SEBI’s interim order also raises concerns about the movement of company funds. One report cited in the provided text says investigators pointed to transactions involving ₹7.4 crore that moved into Mehta’s personal accounts, with a portion later returned to the company. SEBI alleged these were not approved by the board and were not disclosed as related-party transactions.

Another account in the provided material states that SEBI alleged ₹339 crore was transferred from Rajesh Exports to Rajesh Mehta, of which only ₹232 crore was returned, and that the transfers lacked board approvals, audit committee approvals, and proper disclosures. Separately, SEBI also cited explanations such as confidentiality of bank accounts, facilitation of onward transfers, parking funds for court proceedings, and interest-free loan arrangements, while saying it did not find supporting approvals.

ACC Energy, Elest Ltd, and the PLI scheme overhang

Mehta’s denial of fund diversion comes as the company faces a potential removal from the ACC Production-Linked Incentive (PLI) scheme, which is valued at ₹18,100 crore. The provided text links the fund diversion allegations to Rajesh Exports’ subsidiary ACC Energy and promoter-controlled Elest Ltd.

While details of any formal decision on removal are not provided in the material, the reference underscores the broader stakes of the SEBI proceedings for the group’s strategic plans and subsidiaries.

Document submissions, resubmission plan, and internal awareness issues

Rajesh Exports said it had already submitted 300-400 gigabytes of documents to SEBI, but believed the regulator had been unable to locate the correct files. The company said it would resubmit all documents sought within 15 days to resolve the matter.

The provided text also states that, according to the order, the company’s Managing Director and Chief Financial Officer admitted they were unaware of the transactions. That detail, as presented, adds to the governance and control questions that SEBI has highlighted in the interim findings.

Regulatory actions: market bar, forensic audit, NFRA referral

The provided material states SEBI has barred promoter Rajesh Mehta from the securities market and has also barred Rajesh Exports and Mehta from accessing the securities market through the interim order. It also says SEBI ordered a fresh forensic audit and referred the matter to the National Financial Reporting Authority (NFRA) for examination of the company’s auditors.

Mehta told NDTV Profit that no conclusion has been reached against the company and described the alleged revenue misrepresentation as stemming from confusion between gross profit and revenue.

Market impact and investor context

Mehta acknowledged shareholder pain in remarks carried in the provided text, referencing “significant erosion in value”. He maintained the company has done no wrong and expressed confidence that the issue would be resolved.

From a market perspective, the immediate impact stems from uncertainty created by a regulator-led interim order, restrictions on market access, and the prospect of deeper scrutiny through forensic and auditor reviews. The final outcome will depend on submissions, verification of subsidiary records, and the regulator’s next steps.

Key facts at a glance

Why the case matters for disclosures and consolidated reporting

The dispute highlights the sensitivity around consolidated reporting when the majority of reported revenue is attributed to overseas subsidiaries. SEBI’s interim order, as described, focuses on whether consolidated figures can be verified through subsidiary-level records and whether supporting documentation exists for related-party and promoter-linked flows.

Rajesh Exports’ defence hinges on the claim that the regulator misread accounting metrics, specifically treating EBITDA as revenue, and on its intent to resubmit a large set of documents for verification. The regulator’s next assessment will likely turn on whether the resubmitted records align with the group’s consolidated disclosures and whether governance approvals and disclosures exist for flagged transactions.

Conclusion

Rajesh Exports and Rajesh Mehta have rejected SEBI’s interim allegations of revenue misrepresentation and fund routing, arguing that the regulator confused EBITDA with revenue and misunderstood accounting entries. SEBI, meanwhile, has imposed market restrictions, ordered a forensic audit, and referred the matter to NFRA, citing verification and disclosure gaps.

The next visible milestone, based on the company’s statements, is the promised resubmission of documents within 15 days, after which the regulator’s review process and further directions will shape the case’s trajectory.