New Delhi: Rajesh Exports Ltd, once regarded as one of India’s leading gold exporters and a major player in the global precious metals industry, is facing intense scrutiny following serious allegations of financial irregularities. The Securities and Exchange Board of India (SEBI) has issued an interim order barring the company and its promoter-chairman, Rajesh Mehta, from accessing the securities market, citing alleged large-scale misrepresentation of revenues over a five-year period. According to SEBI, the company reported revenues that could not be adequately substantiated through available records during financial years 2020-21 to 2024-25. The regulator has alleged discrepancies amounting to nearly ₹15.15 lakh crore, making the case one of the most significant corporate governance controversies to emerge in recent years.
SEBI Initiates Forensic Probe Following Shareholder Complaint
The matter came to light after a shareholder complaint filed in March 2024 raised concerns regarding unusually large trade receivables that had reportedly remained outstanding for an extended period. The complaint prompted SEBI to initiate a detailed investigation, followed by a forensic audit of the company’s financial records and disclosures. During the course of the probe, investigators reportedly found substantial differences between the revenues disclosed at the consolidated group level and those that could be independently verified through records of overseas subsidiaries. SEBI noted that a significant portion of the company’s reported revenues originated from foreign entities, with overseas operations accounting for the overwhelming majority of consolidated sales during the period under review.
Discrepancies in Overseas Operations and Asset Disclosures
A Switzerland-based subsidiary, considered central to the group’s international operations, also came under scrutiny. Investigators allegedly encountered difficulties verifying several transactions and revenue figures linked to the subsidiary. SEBI stated that key documents, customer records, vendor information and financial statements sought during the investigation were either incomplete or unavailable, complicating efforts to authenticate the company’s reported numbers. The regulator has further questioned a reported investment of approximately ₹1,035 crore in gold mining assets located in Africa. According to the interim findings, sufficient documentation supporting the existence, valuation and ownership structure of these assets was not provided during the investigation. This has raised additional concerns regarding the accuracy of the company’s asset disclosures and balance-sheet strength.
Diverted Funds and Bank Defaults Fuel Wealth Erosion
Another significant aspect of the investigation relates to alleged transactions involving a third-party entity through which thousands of crores of rupees worth of sales and purchases were reportedly recorded. However, during the inquiry, the concerned entity is said to have denied undertaking such transactions, creating further doubts regarding the authenticity of certain accounting entries reflected in the company’s books. SEBI has also alleged that company funds were transferred to accounts linked to the promoter and subsequently used for personal derivative trading activities. The regulator claims that some of these transactions were executed without appropriate board approval and were not disclosed as related-party transactions. These allegations remain subject to further investigation and the company’s response.
The fallout has extended beyond regulatory action. According to SEBI’s assessment, the alleged misconduct may have contributed to shareholder wealth erosion of approximately ₹12,726 crore. The issue has attracted widespread attention because major institutional investors, including public-sector financial institutions, hold significant stakes in the company, making the outcome relevant to a large number of investors and policyholders. Adding to the company’s challenges, lenders have reportedly initiated recovery measures following repayment defaults. A public-sector bank has classified its exposure to the company as a stressed asset and begun efforts to recover outstanding dues through appropriate channels. SEBI has clarified that its order is interim in nature and that the investigation remains ongoing. Rajesh Exports and Rajesh Mehta will have the opportunity to present their defence before any final determination is made.
