In June 2026, the Securities and Exchange Board of India (SEBI) dropped an interim order that sent shockwaves through Dalal Street. The allegation? Between FY21 and FY25, Rajesh Exports reported consolidated revenues of approximately ₹15.45 lakh crore, but about ₹15.15 lakh crore of this—roughly 99.8% of subsidiary-attributed revenue—could not be independently verified against the audited standalone accounts of its principal operating subsidiary, Valcambi SA.
To put that in perspective, ₹15 lakh crore is roughly 20% of India's annual export value and nearly 30% of the Union Budget expenditure for FY26. The company's shares hit the lower circuit immediately after the order, and SEBI estimated that public investor wealth erosion stood at around ₹12,726 crore.
On October 14, 2026, SEBI confirmed its interim directions against Chairman Rajesh Mehta, citing unresolved concerns over financial disclosures, overseas subsidiary consolidation, and alleged related-party transactions. The allegations remain unproven, and the company maintains its innocence, but the scale of the questions raised is extraordinary.
At the heart of this controversy lies a fundamental accounting question: how should a gold refiner report revenue?
Rajesh Exports is primarily a gold refining and bullion trading company. In such businesses, reported revenue can look massive because it includes the full value of the gold passing through the books. However, the real economic earnings typically come from value-added components like refining margins, processing fees, trading spreads, or making charges.
Valcambi's independently audited standalone accounts, prepared under Swiss law and audited by KPMG SA, record only processing charges or value addition as revenue. Yet the holding entities above Valcambi reported nearly ₹3 lakh crore in revenue.
The company argues that SEBI appears to have compared Valcambi's EBITDA (earnings before interest, taxes, depreciation, and amortisation) with its consolidated revenue, which would naturally produce a massive gap. They call this a "communication gap" and insist their consolidated revenue is correct. SEBI, however, rejected this explanation, noting that differences in reporting periods could not account for such a vast discrepancy. Other
The numbers tell a stark story about where Rajesh Exports' business actually resided. Between FY21 and FY26, subsidiaries contributed between 97.43% and 99.20% of total consolidated revenue. In FY25, for instance, the company reported consolidated revenue of ₹4.23 lakh crore, but standalone revenue was only ₹7,027 crore.
This means almost the entire business was conducted through overseas subsidiaries and step-down subsidiaries, including REL Singapore, Global Gold Refineries AG (GGR), Valcambi SA, and others. SEBI alleged that the company did not upload financial statements of these key subsidiaries and rejected the company's argument that subsidiary numbers were "derivable" from consolidated accounts.
The regulator's concern was straightforward: investors were shown large consolidated numbers without adequate access to subsidiary-level proof. This created information asymmetry—the company had the information, but investors did not.
The FY2025-26 annual report shows an unmodified audit opinion on internal financial controls over financial reporting for the standalone entity. The consolidated opinion is also unmodified, though the auditor relies on management-certified information for certain entities. Annual Report +2
However, SEBI's interim order has been referred to the National Financial Reporting Authority (NFRA) for examination of the company's statutory auditors, according to commentary on the case. This signals that the regulator views the audit function as potentially having failed in its primary responsibility to equity shareholders.
The specific audit failure alleged is not one of complexity but of basic procedure. When between 97% and 99% of a listed company's consolidated revenue comes from overseas subsidiaries, the statutory auditor is required to obtain sufficient appropriate audit evidence about those subsidiaries—requesting and reviewing subsidiary-level financial statements, verifying transactions against source documentation, and reconciling what subsidiaries report with what the consolidated accounts reflect. SEBI's order alleges this evidence did not exist in verifiable form.
This investigation didn't start with a sophisticated algorithm or a whistleblower from within. It began with something almost mundane: a shareholder complaint dated March 11, 2024, alleging possible financial misrepresentation, mainly around large trade receivables outstanding for more than two years.
Trade receivables are amounts a company is owed by its customers after delivering goods or services. In most businesses, these are collected within weeks or a few months. Receivables sitting unpaid for two or more years are a serious red flag, often indicating that the underlying sales may not have been genuine transactions.
What investigators found when they began pulling on that thread defied comprehension. The forensic audit by BDO India Services uncovered not just the revenue gap but also allegations of funds routed through the promoter's personal bank accounts, questionable trades, and unexplained overseas revenue.
The market's reaction has been brutal. The stock peaked at ₹1,028.40 in February 2023 but was trading at around ₹104 when the interim order dropped in June 2026. By October 13, 2026, the day before the confirmatory order, the stock had fallen to ₹53.33—roughly a 50% decline from pre-order levels and a 95% decline from its peak [stock_agent].
Institutional investors had already been voting with their feet. Mutual fund ownership has been negligible for a decade, peaking at only 0.5% in March 2016 and declining to zero by 2026. Foreign Portfolio Investors (FPIs) reduced their holding from 14.25% in FY26 Q4 to 12.60% in FY27 Q1 [stock_agent]. Life Insurance Corporation of India (LIC) remains the only major domestic institutional shareholder, holding about 10.8%.
The stock has hit consecutive lower circuits after both the interim and confirmatory orders, with volumes spiking to 388,663 shares on October 13—the highest session since early October [stock_agent].
SEBI's October 14 confirmatory order is not a final verdict but a continuation of interim measures. Mehta remains barred from dealing in the company's securities until further orders. The regulator has ordered a fresh forensic audit by a new auditor and required the company to submit all sought documents within 30 days.
The company disputes the findings and maintains that its revenue is correct. The final outcome will depend on the forensic audit report, and appeals before the Securities Appellate Tribunal are possible, though no information on any filing is available yet. Other
For investors, the Rajesh Exports case serves as a stark reminder: big revenue can be attractive, but revenue without transparency can be dangerous. When most of a company's revenue comes from overseas subsidiaries, especially those whose financial statements are not publicly available, investors need to ask whether those numbers can be independently verified.
The gold and precious metals sector may not face immediate contagion—this appears to be a company-specific governance issue rather than a sector-wide problem—but the case will likely lead to increased scrutiny of how companies with complex offshore structures report their consolidated numbers.
