Capital markets regulator Sebi has passed an interim order against Rajesh Exports and its promoter Rajesh Mehta, alleging large-scale financial misrepresentation, non-cooperation with investigators and possible inflation of the company's reported revenues.
In a 109-page interim order issued on June 3, Sebi said its investigation and forensic review had uncovered prima facie evidence suggesting that about 97-99% of the company's revenue may have been inflated, describing the findings as "egregious and unheard of."
The market regulator has restrained Rajesh Mehta from buying, selling or dealing in securities of Rajesh Exports until further orders. It has also directed the company to cooperate fully with investigators and make true and fair disclosures in its financial statements and related-party transactions.
The order stems from a shareholder complaint received in March 2024 that raised concerns over large outstanding trade receivables in the company's books.
Following a preliminary examination, SEBI launched a formal investigation covering the period from April 2020 to March 2024 and appointed forensic auditor BDO India Services.
Rajesh Exports, a Bengaluru-based gold refiner and jewellery manufacturer, is listed on both the NSE and BSE. The company sells gold products domestically and internationally and operates jewellery stores under the Shubh Jewellers brand.
A major part of Sebi case centres on what it describes as persistent non-cooperation by the company and its promoter during the investigation.
According to the regulator, Rajesh Exports failed to provide access to key accounting systems, withheld critical financial records and did not furnish complete documentation sought by investigators and forensic auditors.
Sebi noted that the forensic auditor was unable to verify large portions of the company's transactions because supporting records were either incomplete or unavailable.
The regulator said only a small fraction of sampled transactions could be fully substantiated with supporting documents.
The order also raises concerns regarding the financial reporting of overseas subsidiaries and step-down subsidiaries, including entities in Singapore and Switzerland. Investigators examined transactions involving subsidiaries such as REL Singapore, Global Gold Refineries AG and Swiss precious metals refiner Valcambi.
Sebi said the lack of access to underlying accounting records significantly constrained the forensic review and prevented independent verification of several reported figures.
The regulator further alleged that the company routed funds in a manner that obscured their origin and destination, raising concerns about the authenticity of the reported financial statements.
Given the seriousness of the findings, Sebi said immediate intervention was necessary to protect investors and maintain market integrity.
"The aberrations prima facie noted in the matter, where approximately 97% to 99% of the revenue of the company is inflated, are egregious and unheard of," Whole-Time Member Kamlesh Chandra Varshney said in the order.
Apart from restraining Rajesh Mehta from dealing in the company's securities, Sebi has directed Rajesh Exports to provide all pending information sought by investigators within 30 days.
The regulator has also ordered the appointment of a fresh forensic auditor to conduct a more detailed review of the company's books and transactions.
