Rajesh Exports' ₹15 trillion discrepancy: Fraud or accounting error?
Rajesh Exports' ₹15 trillion discrepancy: Fraud or accounting error?
The Securities and Exchange Board of India (SEBI) has launched an investigation into Rajesh Exports, a leading gold exporter.
The regulator has accused the company of financial misrepresentation and fund-routing irregularities.
The case centers on a staggering claim that Rajesh Exports inflated its consolidated revenues by some ₹15 lakh crore between FY21 and FY25.
This figure accounts for nearly 99.8% of the company's reported consolidated revenue during this period.
Interim order, nothing in it is true: Rajesh Mehta
Rajesh Mehta, the chairman and managing director of Rajesh Exports, has denied SEBI's charges.
He told Moneycontrol on Thursday that it is "an interim order and nothing in it is true."
Mehta added that they are currently studying the order and will prepare a response.
The company has been known as an integrated gold company with operations in refining, manufacturing, exports, wholesale, and retail.
Revenue reporting practices under scanner
SEBI has raised concerns over Rajesh Exports' revenue reporting practices.
The regulator claims that the company recognized gross gold transaction values as revenue, instead of just refining or processing income.
This was done without adequate supporting records, customer details, invoices or accounting justification.
The distinction is crucial because in commodity businesses like gold refining, only the fee or margin earned qualifies as revenue rather than the full value of the gold handled.
Investigation initiated following shareholder complaint in March 2024
The current SEBI investigation was initiated by a shareholder complaint received in March 2024.
The complaint alleged possible financial misrepresentation linked to large trade receivables outstanding for over two years.
Following this, the regulator examined the period from April 2020 onward.
SEBI has also accused Rajesh Exports of misrepresenting standalone revenues by ₹12,557 crore during FY21-FY24 and recording personal derivative transactions as company sales and purchases.
Allegations of fund routing through personal bank accounts
SEBI has also flagged alleged routing of company funds through the personal bank accounts of Mehta and Siddharth Mehta without disclosure as related-party transactions or approval from the board and audit committee.
The interim order also mentions a claimed investment in African gold mines that could not be independently corroborated from the financial information available on record, as per SEBI.
These allegations point to broader governance concerns at Rajesh Exports.
Broader governance concerns and financial scrutiny
The allegations against Rajesh Exports have raised questions over its financial practices.
The company has been under periodic scrutiny from market participants over issues such as weak cash-flow conversion, elevated receivables, limited visibility into overseas operations, and discrepancies between reported earnings and operating cash flows.
For years, Rajesh Exports continued to be one of India's highest-revenue listed companies due to its low-margin commodity business where profits and cash generation were often far smaller than headline revenue figures suggested.