Between FY 2020-21 and FY 2024-25, Rajesh Exports reported consolidated revenue of approximately ₹15.45 lakh crore. However, SEBI's investigation revealed that nearly ₹15.15 lakh crore—representing 99.80% of subsidiary revenues—could not be independently verified. The company attributed 97-99% of its consolidated business to overseas subsidiaries, primarily Swiss-based entities Valcambi SA and Global Gold Refineries AG (GGR). Yet when SEBI examined Valcambi's independently audited financial statements, a shocking discrepancy emerged.
This gap of ₹15.15 lakh crore forms the core of SEBI's allegations.
The fundamental inconsistency lies in the revenue attribution structure. Valcambi SA, described by the company as its principal operating business and one of the world's largest gold refiners, reported standalone revenues of only ₹542.68 crore in CY 2023. This figure constitutes less than 0.50% of both GGR's reported revenues (₹2.92 lakh crore) and Rajesh Exports' consolidated revenues (₹2.80 lakh crore). GGR, characterized as a holding company with no significant day-to-day operations, reported revenues vastly larger than the operating company beneath it. SEBI found this accounting treatment "commercially implausible" and noted that no accounting standard supports a holding company booking revenues that the actual operating company doesn't recognize in its own audited books.
Rajesh Exports attempted to justify the discrepancy by explaining that Valcambi SA only booked its "processing fees" as revenue, while GGR recognized the "full gross value of gold transactions." SEBI rejected this explanation as prima facie untenable. The regulator noted that Valcambi's audited financial statements did not recognize the gross value of gold transactions as revenue and reflected only processing income. This inverted revenue recognition model—where a holding company with no operations generates massive revenues while the operating subsidiary records minimal amounts—created opportunities for artificial inflation. By booking gross transaction values through GGR rather than actual value-addition at Valcambi, the company could present an inflated picture of operational scale without corresponding economic substance.
The causal relationship between missing documentation and unverifiable revenues is direct. SEBI found that Rajesh Exports systematically withheld audited financial statements of subsidiaries and step-down subsidiaries, failed to provide customer-wise sales data, vendor details, debtor and creditor information, and did not furnish transaction-level records despite repeated summons. This created a severe information asymmetry where investors saw massive consolidated figures but had no access to the underlying subsidiary data that generated those revenues. The company argued that investors could "derive" subsidiary numbers from standalone and consolidated accounts, but SEBI rejected this, noting that consolidated accounts show one merged number without revealing entity-wise risks, cash flows, or related-party exposure.
As of June 3, 2026, Rajesh Exports had a market capitalization of approximately ₹3,210 crore with shares trading at ₹109.38.
The apparent scale (₹15.45 lakh crore over five years) suggested market leadership and operational capability comparable to India's largest companies like Reliance Industries and LIC. Without access to subsidiary-level data, investors could not discern that 99.80% of this revenue was unverifiable. The stock had already lost more than 50% from its 52-week high before the SEBI order, and following the announcement, shares hit the 5% lower circuit for consecutive sessions.
SEBI characterized the apparent inflation of 97-99% of the company's revenues as "egregious and unheard of." This assessment is justified by multiple factors: the scale of misrepresentation (₹15.15 lakh crore), the duration (five consecutive years), the completeness of inflation (nearly 100% of subsidiary revenue), and the sophistication of evasion through complex offshore structures. Historical comparisons show that most major Indian corporate frauds involved balance sheet manipulation rather than revenue inflation of this magnitude. The 97-99% inflation crosses materiality thresholds by nearly 20-fold and represents a fundamental failure of financial reporting integrity, warranting immediate regulatory intervention.
The specific failures in cooperation directly contributed to SEBI's decision to issue interim restraint orders. The company denied access to enterprise resource planning (ERP) systems, books of accounts, and journal dumps. It refused to provide detailed subsidiary-level records, provided incomplete ledgers with missing narration details, and failed to provide supporting documents for large transaction samples.
This pattern of obstruction created a reasonable apprehension that evidence could be destroyed or altered, necessitating ex-parte interim orders.
The investigation began on March 11, 2024, when SEBI received a shareholder complaint raising concerns about large trade receivables that had remained outstanding for over two years. In the gold and jewellery business, typical receivable cycles range from weeks to months, not years. As SEBI examined the receivables issue, the scope widened to broader financial reporting practices. The inability to verify receivables raised questions about other reported figures, leading investigators to focus on overseas subsidiaries that generated 97-99% of reported revenue. What began as a specific receivables concern ultimately revealed alleged misrepresentation of ₹15.15 lakh crore.
Rajesh Exports cited Swiss data protection laws and confidentiality obligations as reasons for withholding information about Valcambi SA. SEBI categorically rejected this argument, clarifying that Swiss data protection laws are designed to protect personal data of individuals, not corporate financial information. The regulator stated that a listed entity operating in the Indian securities market cannot rely upon private confidentiality arrangements or foreign data protection provisions to defeat or dilute its statutory disclosure obligations under Indian securities laws. This rejection establishes important precedents for cross-border regulatory oversight and prevents companies from using international structures to evade scrutiny.
This admission established that the promoter had direct knowledge and control over 97-99% of the company's revenue source. Given that ₹15.15 lakh crore of subsidiary revenue was allegedly misrepresented, the person with exclusive control over that revenue source bears direct responsibility. The statement also revealed a governance vacuum where normal corporate oversight structures were bypassed, creating conditions that enabled alleged misrepresentation to occur undetected.
The governance failures extended beyond revenue inflation to include fund diversion. SEBI found that ₹7.45 crore was transferred from Rajesh Exports to Rajesh Mehta's personal accounts for personal gold derivatives trading, resulting in losses of approximately ₹3.50 crore. These transactions lacked board approval, audit committee review, proper agreements, or disclosure as related-party transactions. After incurring losses, approximately ₹3.91 crore was transferred back to the company. This pattern indicates systemic internal control weaknesses and a culture of non-disclosure. The company also transferred ₹339 crore to the promoter (only ₹232 crore returned) and ₹566 crore to Elest Pvt. Ltd. (only ₹350 crore returned), demonstrating a broader pattern of unauthorized fund movements.
The statutory auditors, including CA P.V. Ramana Reddy and CA P.L. Venkatadri of B S D & Co., issued unqualified audit opinions for five consecutive years despite the alleged misrepresentation. Critical audit procedures were omitted or inadequately performed: auditors failed to obtain and verify subsidiary financial statements, did not reconcile the massive discrepancy between consolidated and subsidiary figures, inadequately tested related-party transactions, and exercised insufficient professional skepticism regarding unusual revenue patterns. SEBI forwarded the order to the National Financial Reporting Authority (NFRA), citing "prima facie misconduct and dereliction of duties" by the statutory auditors. NFRA is likely to investigate compliance with auditing standards, professional competence, and negligence patterns in accepting unaudited subsidiary figures without verification.
The lack of verifiable subsidiary financial statements and transaction-level data fundamentally impeded auditors' ability to perform substantive testing. When 65% of sales samples and 98% of purchase samples lacked complete documentation, auditors should have qualified their opinions or issued scope limitations. Instead, they accepted management representations and unaudited subsidiary figures without obtaining sufficient appropriate audit evidence. Under auditing standards, when management prevents auditors from obtaining necessary evidence, auditors must consider resignation or qualified opinions. The failure to do so represents a fundamental breach of professional responsibility to public interest over client convenience.
