The Rajesh Exports case has widened into a major question for India’s share market, audit system, banking oversight and corporate governance after SEBI alleged that the jewellery and gold trading company inflated its earnings figures for several years.
According to the visible report, SEBI has accused Rajesh Exports of showing 97 to 99 percent of its total earnings through foreign subsidiary companies. The scale of the alleged discrepancy has been described as nearly ₹15.15 lakh crore, raising questions over how such figures appeared in the company’s balance sheet for years without earlier detection.
Foreign Subsidiary Dealings Under Scrutiny
SEBI has alleged that Rajesh Exports showed a major part of its earnings through foreign subsidiaries, with Valcambi SA named in the report as the most prominent. The documents reportedly suggested that the company’s real business was being routed through such entities, but the audited accounts did not present a matching picture.
The report also refers to allegations of sales and purchases worth thousands of crores being shown with one entity, which allegedly denied having such transactions with the company. If proven, the report said, this would indicate that the business may have existed only on paper and not in actual trade.
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Questions Over Fund Diversion and Audit Oversight
SEBI has also alleged that company funds reached private accounts linked to the promoter. The report said part of the money was allegedly used in derivative trading, even though company funds are supposed to be used for company purposes. Such use of funds in private accounts, if proven, could be treated as a serious corporate governance violation.
The article also questioned the role of auditors, noting that a balance sheet is not merely a written message accepted without scrutiny. It is prepared and then examined at several levels, including management, board, audit committee, independent directors and auditors. The auditor’s role, the report said, is not just to sign documents but to verify whether the figures presented by the company are accurate.
Banks, Regulators and Investors Face Tough Questions
The report raised questions about the role of banks and rating agencies, noting that large companies rely on banking facilities such as credit limits, loans, guarantees, letters of credit and export finance. It asked whether banks independently checked the company’s figures and whether exports, sales, payments and foreign transactions were properly matched.
The article said the biggest loss in such cases is borne by ordinary investors, who rely on audited balance sheets, SEBI’s systems and stock exchange disclosures. SEBI has alleged that the reported irregularities and fund diversion caused losses worth thousands of crores to shareholders.
The report described the matter as not just a company-specific case but a test of the wider corporate system. It said the central question now is whether the investigation remains limited to the company and its owners or extends to those whose signatures, approvals and silence allegedly allowed the figures to remain in the financial system for years.
