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Informist, Thursday, Jun. 11, 2026

 

By Prateem Rohanekar

 

MUMBAI – Accounting professionals view the Securities and Exchange Board of India's interim order against Rajesh Exports Ltd., alleging grave misrepresentation of financial statements and refusal to produce documents before the market regulator, as an eye-opener in the annals of corporate accounting. If SEBI's prima facie findings are later confirmed, it would represent a case where the credibility of a listed company's financial statements, which portrayed large-scale operations, was seriously in doubt and their accuracy could not be independently verified.

 

The accounting professionals pointed to an egregious pattern of conduct by Rajesh Exports, designed to present a false financial picture to investors and the market, citing prima facie findings in SEBI's interim order dated June 3. Nearly all material aspects of Rajesh Exports' financial statements appeared not to comply with Indian Accounting Standards, according to these professionals.

 

According to SEBI's interim order, Rajesh Exports may have misrepresented aggregate consolidated revenues of INR 15.15 trillion, around 99.8% of its total consolidated revenues, over the five-year period from 2020-21 (Apr-Mar) to FY25. The company also allegedly misrepresented aggregate standalone revenues of INR 125.57 billion, or 64.5% of its total standalone revenues, over FY21-FY24.

 

The company's promoter and chairman, Rajesh Mehta, also allegedly falsely attributed transactions worth at least INR 3 billion to the company. SEBI, in its order, noted that substantial sums were transferred by Rajesh Exports to Mehta and subsequently transferred back to the company without any commercial rationale or economic substance. The regulator further noted that a total of INR 11.5 million that was transferred by the company to Mehta remained unexplained as of the date of the interim order.

 

Based on its prima facie findings, SEBI barred Mehta from dealing in the company's securities, on the grounds that more than 99% of the company's revenues were allegedly inflated and that the matter may, prima facie, constitute a systemic multi-year scheme of financial misrepresentation. SEBI also directed Rajesh Exports to make true and fair disclosures in its financial statements, related-party transactions, and other filings under the listing regulations.

 

According to experts, the alleged irregularities in Rajesh Exports' financial statements stem from its corporate structure. Rajesh Exports holds a 5% stake in Swiss-based Global Gold Refineries AG, while the remaining 95% is held by its Singapore-based subsidiary, REL Singapore. Global Gold Refineries, in turn, owns a 100% stake in Valcambi SA, another Swiss company.

 

"Rajesh Exports used what is known as an opaque structure in corporate law. This involves placing companies in tax havens or jurisdictions with strict secrecy laws. The corporate structure, using intermediaries to hold shares of a subsidiary company, tries to hide the real person in control," a company secretary with a Pune-based consulting firm said.

 

According to SEBI's interim order, Rajesh Exports claimed Valcambi was the group's principal operating entity and the main driver of its revenues. Rajesh Exports told SEBI that Valcambi was engaged in refining precious metals in Switzerland and selling branded precious metal bars, including gold bullion bars, to various entities such as banks, central banks, bullion exchanges, and bullion dealers. Rajesh Exports also claimed that Global Gold Refineries was merely a holding company for its wholly-owned subsidiary, Valcambi, and had no say in day-to-day operations.

 

"Over the five-year period, Rajesh Exports increasingly came to resemble a holding company whose reported scale, profitability, and valuation depended overwhelmingly on a small cluster of overseas subsidiaries rather than on operations housed within the listed India entity itself", said Pune-based independent chartered accountant Balaji R.

 

"At the heart of the dispute is SEBI's question to Rajesh Exports. SEBI asked Rajesh Exports how Valcambi's revenue could constitute less than 0.5% of the revenue reported by its holding companies, while Global Gold Refineries could report revenues that made up more than 80% of Rajesh Exports' revenue?" said Ameya Munagekar of My Expert Inc., a US-certified public accountant operating in India.

 

Rajesh Exports contended that Valcambi accounted only for "processing revenues" or "value addition", whereas Global Gold Refineries recognised the gross value of gold transactions, including processing charges. SEBI found the company's explanation to be questionable.

 

While Valcambi's audited financial statements confirmed that it recognised only processing charges or value addition as revenue, SEBI observed that Rajesh Exports failed to adequately justify the revenue recognised by Global Gold Refineries on gold processed by Valcambi.

 

"SEBI looked at Valcambi's audited accounts and found revenues of only a few billion rupees. It then looked at Global Gold Refineries' consolidated accounts and found revenue of trillions of rupees. The essential question is: if Valcambi is the operating company and only reports processing income, where did the revenues worth trillions come from?" Munagekar asked. "This also creates questions like did Global Gold Refineries buy and sell the gold? Who bore the price risk? Who held the inventory?"

 

The seriousness of the matter was further compounded by Rajesh Exports' reliance on Global Gold Refineries' unaudited financial statements when preparing its own consolidated financial statements. "Swiss companies with sizeable operations are required to carry out a limited statutory audit under Swiss laws, in order to place a summary report before the shareholders of the companies. Of course, SEBI might not be able to investigate contraventions of Swiss law. However, it is interesting that the financial statements of Global Gold Refineries were not audited," Munagekar said.

 

"Rajesh Exports' refusal to produce documents corroborating the genuineness of its apparently inconsistent internal accounting practices has further drawn the ire of the authority. Under such circumstances, it seems SEBI is correct in its prima facie observations that the company's consolidated financial statements between the financial year 2020-21 to FY25 portray an inflated and misleading picture of its operational scale, consolidated financial position and financial health before investors and the securities market", Munagekar added.

 

SEBI noted that Rajesh Exports had recorded sale transactions aggregating INR 114.87 billion and purchase transactions worth INR 114.88 billion with Affluence Shares and Stocks Pvt. Ltd., between FY22 and FY24. These transactions constituted approximately 66.0% of Rajesh Exports' standalone sales and 67.1% of its standalone purchases during the said period.

 

"Rajesh Exports' inability to corroborate these purchases through returns filed under other laws such as the Central Goods and Services Tax Act, 2017, requires detailed scrutiny of the matter," said Balaji. "The company has also failed to produce any other supporting documentation for the transactions with the stock broker, and Affluence has also denied any association with Rajesh Exports", Balaji said.

 

SEBI further noted that the disclosed scale and nature of operations of Affluence, a SEBI-registered stockbroker, appeared prima facie inconsistent with Rajesh Exports' claim that it undertook sale and purchase transactions aggregating worth more than INR 114 billion with Affluence between FY22 and FY24.

 

"The near matching of sales and purchases, absence of meaningful commercial value addition, absence of direct banking transactions between REL (Rajesh Exports) and Affluence, denial by Affluence regarding the existence of transactions with REL, and absence of supporting documentation collectively raise serious concerns regarding the genuineness and economic substance of the transactions recorded by REL with Affluence," SEBI's order noted.

 

SEBI could not independently verify Rajesh Exports' other non-current investments worth INR 10.35 billion, which accounted for more than 83% of its total non-current investments in FY23 and were classified by the company as investments in gold mines in Africa. SEBI observed that Rajesh Exports' other non-current investments, disclosed on a consolidated basis, increased from INR 8.80 billion as on March 31, 2021, to INR 10.35 billion as on March 31, 2023, and further to INR 105.48 billion as on March 31, 2025.

 

In June 2024, the National Stock Exchange sought details from Rajesh Exports regarding other non-current investments worth INR 10.35 billion as of March 31, 2023. Rajesh Exports replied that the amount pertained to investment in gold mines in Africa.

 

"The regulator has examined the company's claims regarding investment in gold mines in Africa corresponding to the amount of INR 10.35 billion in Rajesh Exports' standalone financial statements of REL for FY23, or the standalone financial statements of REL Singapore and Global Gold Refineries. The company should ideally have land use and tenure documentation, environmental permits, technical and geological reports, etc," Balaji said.

 

Further, SEBI noted in the interim order that Rajesh Exports' standalone trade receivables declined by nearly 49?tween FY22 and FY24, to INR 25 billion in FY24 from INR 48.57 billion in FY22. The regulator observed that during FY24, Rajesh Exports reduced its standalone trade receivables by INR 29.14 billion against trade payables.

 

Rajesh Exports claimed that INR 29.14 billion was allegedly adjusted merely on the basis of email correspondence and telephonic understanding with the concerned parties. Rajesh Exports admitted that no formal agreement documenting the adjustment of trade receivables against trade payables was executed at the time.

 

"Financial statements of a company are required to disclose the true and fair view of a company's financial position to the user of the statements, particularly the investors. Reliability and verifiability are other key elements to be remembered while preparing a company's financial statement. Rajesh Exports' financial statements seem to project a scale and size that cannot be independently verified by the regulator," Balaji said.  End

 

Edited by Saji George Titus

 

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