SEBI Finds Rajesh Exports Prima Facie Misrepresented ₹15.15 Lakh Crore Revenue; Bars Promoter From Market

The Securities and Exchange Board of India (SEBI) on Friday passed an interim ex parte order against jewellery company Rajesh Exports Ltd (REL) and its promoter, Rajesh Mehta.

The regulator has prima facie found that the company misrepresented about ₹15.15 lakh crore in revenues attributed to its subsidiaries and step-down subsidiaries over a five-year period.

The interim order was passed by SEBI Whole Time Member Kamlesh Chandra Varshney. He observed that the company's reported revenues could not be independently verified despite repeated demands for records and supporting documents.

"The failure of REL to furnish transaction-level records, customer details, vendor confirmations, invoices, inventory trails, or other primary evidentiary material, coupled with the negligible standalone revenues disclosed by only overseas operating entity and the absence of demonstrable substantive operations by others, renders the consolidated revenue figures of REL commercially implausible.", the regulator noted.

The matter began with a complaint from a shareholder in March 2024. The complaint alleged possible financial misrepresentation linked to large trade receivables that had remained outstanding for more than two years. Following a preliminary examination, SEBI appointed an investigating authority. It later brought in a forensic auditor as well.

What drew the regulator's attention was the gap between the scale of business projected in Rajesh Exports' consolidated financial statements and the information available to verify those numbers. According to the order, subsidiaries and step-down subsidiaries accounted for roughly 97% to 99% of the group's reported revenue.

SEBI noted that despite multiple summons, the company did not provide customer-wise sales data, vendor details, invoices, purchase records and other documents sought during the investigation. The regulator observed that the absence of these records prevented independent verification of the reported revenues.

A substantial part of the probe focused on the group's Swiss entities, Global Gold Refineries AG (GGR) and Valcambi SA. The regulator recorded that Rajesh Exports had projected Valcambi as the group's principal operating company. However, Valcambi's audited standalone financial statements reflected revenues that were only a small fraction of the revenues reported at the consolidated level.

SEBI also rejected the company's reliance on Swiss data protection laws and confidentiality obligations. The company had cited those reasons for withholding information relating to its overseas subsidiaries.

"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.", the regulator observed.

The regulator observed that investors were shown consolidated revenue figures without access to the underlying financial information of the subsidiaries and step-down subsidiaries that generated most of those revenues.

Based on the material before it, SEBI prima facie found that Rajesh Exports misrepresented about ₹15.15 lakh crore. According to the order, that represented 99.80% of revenues attributed to subsidiaries and step-down subsidiaries between FY 2020-21 and FY 2024-25.

"The aforesaid conduct appears to have prima facie enabled REL to portray an inflated and misleading picture of its operational scale, consolidated financial position and financial health before investors and the securities market.", it noted.

Pending further investigation, SEBI has directed Rajesh Exports and Mehta to cooperate with the probe and furnish information sought by the regulator.

The order also restrains Mehta from buying, selling, or otherwise dealing in securities until further directions.