Rajesh Exports cites 'communication gap' with Sebi, says revenues correct

Rajesh Exports Ltd (REL) on Thursday claimed there appeared to be a "communication gap and confusion" between the company and the Securities and Exchange Board of India (Sebi), a day after the market regulator issued an interim order alleging possible misrepresentation of revenues and fund diversion involving the company and its promoter.

In an exchange filing, the company said Sebi's order was only an interim order and that "no adverse" conclusion had been reached. It maintained that its reported revenues were "correct" and "not overstated".

The company added that it was submitting all required documents and was confident the regulator would arrive at the correct conclusion once the information was examined.

The clarification comes after Sebi's interim order on June 3 raised questions over nearly ₹15.15 trillion of revenue reported through the company's overseas subsidiary structure between FY21 and FY25.

Probe began with shareholder complaint

The case began with a shareholder complaint in March 2024 regarding large trade receivables that had remained outstanding for years, prompting Sebi to launch a deeper review of the company's accounts and disclosures.

As part of the investigation, Sebi appointed an investigating authority in October 2024 and later engaged a forensic auditor to examine the company's books and transactions.

According to the regulator, repeated requests were made for customer-wise sales data, vendor records, subsidiary financial statements, transaction documents and access to accounting systems. Sebi alleged that several requests either went unanswered or were only partially answered.

The forensic auditor also reported difficulties in verifying a large number of transactions because supporting records were either incomplete or unavailable.

Swiss subsidiaries at the centre

A major part of Sebi's concerns relates to Rajesh Exports' overseas subsidiary structure.

The company operates through REL Singapore, which owns Switzerland-based Global Gold Refineries AG (GGR). GGR, in turn, owns Valcambi SA, the Swiss gold refinery that Rajesh Exports has described as the group's principal operating entity.

Sebi's order noted that consolidated revenues of about ₹15.45 trillion were reported between FY21 and FY25, with almost all of it attributed to subsidiaries and step-down subsidiaries. However, the regulator said audited standalone financial statements of Valcambi showed significantly lower revenue figures than those reported at the group level.

Rajesh Exports argued that the apparent mismatch stemmed from differences in accounting treatment. According to the company, Valcambi's standalone accounts reflect only processing and value-addition income, while GGR records the gross value of gold transactions.

Sebi, however, said it had not received sufficient supporting documentation, reconciliations or transaction-level evidence to independently verify the explanation.

Questions over transactions

Sebi also questioned transactions involving Affluence Shares and Stocks Pvt Ltd. The regulator said Rajesh Exports recorded transactions worth over ₹11,000 crore with Affluence between FY22 and FY24, but the firm reportedly denied dealing with the company, stating it had transacted only with promoter Rajesh Mehta. Sebi also alleged that company funds were routed through Mehta.

Rajesh Exports has disputed the findings and said it is cooperating with the investigation.