Rajesh Exports: SEBI flags ₹15.15 lakh cr misreporting

What triggered SEBI’s action

Rajesh Exports Ltd (REL), a Bengaluru-based gold exporter, is facing serious allegations of financial misreporting after an interim order by the Securities and Exchange Board of India (SEBI) dated 3 June. The order focuses on a large mismatch between revenues reported in REL’s consolidated financial statements and what SEBI says can be supported using subsidiary-level records. The regulator’s findings also highlight repeated disclosure gaps around overseas subsidiaries that account for nearly all of the company’s consolidated revenues.

REL has denied the allegations. In a press release issued on Thursday, the company said the revenues in its financial statements were accurate and attributed SEBI’s conclusions to confusion between revenue and EBITDA figures at Valcambi SA, an indirect subsidiary.

Contradictory submissions and missing overseas financials

A central issue in the interim order is the reliability and traceability of subsidiary financial information. A Mint review of documents said REL and its Singapore subsidiary gave contradictory statements to regulators in India and Singapore, blurring the actual finances of overseas units.

SEBI recorded REL’s submission that it could not disclose standalone financial statements of all overseas subsidiaries because REL Singapore Pte Ltd had already consolidated and shared them. According to SEBI, REL stated that audited financials of step-down subsidiaries were first consolidated at the level of REL Singapore and then forwarded to REL for preparation of the final consolidated financial statements. SEBI treated these inconsistencies and the limited availability of subsidiary financial statements as a key obstacle in independently verifying group-level numbers.

The scale of allegations: revenue inflation and misrepresentation

SEBI has alleged that REL misrepresented revenues attributable to subsidiaries during FY21 to FY25. The interim order said the misrepresentation was over 99 percent for the period under review, amounting to ₹1,515,000 crore. The regulator described the alleged misrepresentations as “egregious and unheard of” and said the conduct, prima facie, portrayed an inflated picture of operational scale, revenue, and financial health.

REL is a company with a market capitalisation of just over ₹2,900 crore, but SEBI’s interim findings place it at the centre of what could become one of the larger alleged misrepresentation cases in India’s equity markets. Beyond revenue, SEBI also alleged accounting irregularities, diversion of funds into personal accounts, and conduct designed to mislead investors.

What REL reported in FY24 and FY25

The interim order and reporting around it point to unusually thin profitability relative to the revenue base reported by REL. In FY25, REL reported consolidated revenue of ₹423,000 crore, while profit after tax stood at ₹95 crore, implying a net margin of about 0.02%. In FY24, REL reported revenue of ₹280,000 crore and profit of ₹336 crore.

These numbers are important because SEBI’s case hinges on whether the consolidated revenue scale can be substantiated using audited, standalone records of key overseas entities and transaction-level evidence.

Valcambi, overseas subsidiaries, and the verification gap

SEBI said 97% to 99% of REL’s consolidated revenue was attributed to overseas subsidiaries, primarily Valcambi SA. However, Valcambi’s own accounts, audited by KPMG SA, reportedly showed only processing-fee income of approximately ₹3,027 crore over five years.

The regulator’s interim findings describe a striking mismatch: consolidated group revenues running into several lakh crore rupees versus standalone audited numbers at a key Swiss subsidiary that appear far smaller. SEBI said this discrepancy raises basic questions about consolidation, classification of income, and whether revenues attributed to subsidiaries represent genuine underlying transactions.

How the probe began and what SEBI says it found

The matter originated from a shareholder complaint received in March 2024. The complaint raised concerns over substantial trade receivables reflected in REL’s accounts, including receivables outstanding for more than two years.

After a preliminary review, SEBI launched a detailed investigation covering the period from April 2020 to March 2024. SEBI appointed BDO India Services as the forensic auditor. In the interim order, SEBI also alleged that REL did not fully cooperate with the investigation and forensic work. The regulator said the company refused access to systems and books of account, did not provide journal dumps, provided incomplete ledgers with missing narration, and failed to provide supporting documents for large transaction samples.

Disclosure lapses: subsidiary accounts and transaction-level data

SEBI said REL 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, and ACC Energy Storage Pvt. Ltd.

The regulator also said REL failed to provide customer-wise and vendor-wise information of overseas subsidiaries despite repeated summons. SEBI framed this as creating severe information asymmetry for investors and as limiting the regulator’s ability to verify consolidated financial performance.

Other allegations: mines, forex accounting, and fund diversion

SEBI’s interim order also flagged claims around gold mine investments. REL had announced in FY23 that it invested ₹1,035 crore in gold mines in Africa, but SEBI said no such investment was reflected in the standalone financial statements of REL for FY2023 or in the standalone financial statements of any subsidiary.

SEBI also alleged REL inflated revenue by including forex fluctuations in revenue and purchases rather than separately accounting for them, including ₹866 crore added to revenue and ₹716 crore added to purchases.

Further, SEBI alleged that REL routed company funds worth ₹339 crore to promoter Rajesh Mehta’s personal accounts, including for derivative trades, without board or audit committee approval and without proper related-party disclosures.

SEBI’s interim directions and the company’s response

SEBI has barred the company and its owner from the securities markets pending investigation, and prohibited CEO Rajesh Mehta from buying or selling the company’s securities. The interim order also directed REL to cooperate with the investigating officer and forensic auditors.

SEBI said it forwarded a copy of its order to the National Financial Reporting Authority for appropriate action, if any, against REL’s statutory auditors (BSD & Co). REL continues to reject SEBI’s allegations and says its reporting remains accurate.

Key figures and timeline

Why this matters for investors and the market

SEBI’s interim findings go to the heart of how investors evaluate scale, business quality, and risk. If nearly all consolidated revenues are attributed to overseas subsidiaries, the reliability of subsidiary financial statements, audit trails, and transaction-level data becomes critical. The interim order also highlights how limited public disclosure of subsidiary accounts can complicate verification for both regulators and shareholders.

The case also underscores a broader governance issue: when regulators and forensic auditors say they face restricted access to systems, journals, and supporting documents, it increases uncertainty around reported numbers. SEBI’s direction to correct related-party disclosures and present “true and fair” financial statements indicates that the regulator sees the issues as extending beyond a single accounting item.

Conclusion

Rajesh Exports is contesting SEBI’s interim findings, but the order sets out allegations of large-scale revenue misrepresentation tied to overseas subsidiaries, disclosure lapses, and suspected fund diversion. The next phase will depend on investigative and forensic verification, including the company’s cooperation with SEBI’s investigating officer and auditors, and any further regulatory steps that follow the interim order.