Rajesh Exports Allegedly Misrepresented 99.8% Of Consolidated Revenue: SEBI In Interim Order Continuing Curbs

The Securities and Exchange Board of India (SEBI) on Wednesday continued interim restrictions on Rajesh Exports Limited and its promoter Rajesh Mehta, over alleged misrepresentation of the company's financial statements, undisclosed related-party transactions and concerns over the use of company funds.

In its October 14 order, SEBI Whole-Time Member Kamlesh C. Varshney found that the company had failed to rebut several prima facie findings recorded in the interim order, including the alleged misrepresentation of 99.80% of its consolidated revenue during FY2020-21 to FY2024-25.

The regulator's interim order makes findings alleging that approximately ₹15,15,385 crore of consolidated revenue, representing 99.80% of the total consolidated revenue during the five-year period, had been misrepresented. SEBI also flagged alleged misrepresentation of approximately ₹12,557 crore in standalone revenue, representing 64.53% of the total standalone revenue between FY2020-21 and FY2023-24.

The proceedings concern Rajesh Exports' financial disclosures, including the disparity between its consolidated revenue of ₹15,44,898.77 crore and the standalone revenue of its subsidiary Valcambi SA, which reported ₹3,027.38 crore over the relevant five-year period.

“In this case, discrepancy between consolidated revenue of REL (INR 15,44,898.77 crore) and standalone revenue of Valcambi SA (INR 3,027.38 crore) is approximately 99% which cannot be explained on the basis of difference in reporting period,” SEBI observed.

Rajesh Exports submitted that Valcambi reported revenue on a value-addition basis, while its holding company, Global Gold Refineries AG, recorded the gross value of gold transactions along with processing charges. The company maintained that revenue was consolidated through its subsidiaries in accordance with applicable accounting standards. It also relied on differences in the reporting periods followed by Indian and overseas entities to explain the disparity.

SEBI found that the explanation remained unsupported by the documents provided. The order records: “During personal hearing also, the Noticees submitted that Valcambi SA reported revenue on both value added basis as well as gross value basis. Upon being asked to produce the audited account of Valcambi SA on gross value basis, Noticees could not produce any document to this effect.”

The regulator also examined transactions involving Affluence Shares and Stocks Pvt Ltd. Its interim findings alleged that derivative transactions undertaken by Mehta personally were recorded as Rajesh Exports' sales of ₹11,487 crore and purchases of ₹11,488 crore.

SEBI also flagged the alleged classification of ₹867 crore in foreign exchange fluctuations as revenue from operations, ₹716 crore as purchases, and ₹204 crore in interest income from mutual funds and fixed deposits as revenue from operations.

Other concerns included the purported investment of ₹1,035.27 crore in African gold mines, which SEBI described as unsubstantiated and unverifiable based on the available record.

The regulator also questioned adjustments between trade receivables and payables involving four overseas entities. These adjustments accounted for approximately 98% to 99% of standalone trade receivables during FY2021-22 to FY2023-24. The company had not furnished formal agreements governing them, according to the order.

The regulator further examined fund transfers involving Mehta, his son Siddharth Mehta and Elest Pvt Ltd, an entity substantially owned and controlled by Mehta.

The interim findings flagged transactions that had not been disclosed as related-party transactions or approved by the company's board. SEBI also scrutinised an investment of ₹262 crore by ACC Energy Storage Pvt Ltd in Elest during FY2024-25, noting that details about the valuation, percentage stake and underlying terms were unavailable on record.

In its order, the regulator also records concerns over incomplete information and inconsistent submissions that SEBI found had hampered its investigation and the forensic audit.

Mehta remains restrained from buying, selling, or otherwise dealing in Rajesh Exports securities, directly or indirectly, until further orders. The company must make true, fair, accurate, and complete disclosures and cooperate with the ongoing investigation and forensic auditor.

The regulator clarified that the order does not constitute a final determination of the allegations or a final finding of regulatory violations.