The Enforcement Directorate (ED), which conducted raids at Bengaluru-based gold refiner and jewellery manufacturer Rajesh Exports, has uncovered suspected irregularities, including an unexplained Rs 1,035 crore overseas investment, opaque foreign trade transactions worth around Rs 3,000 crore, a 40 per cent inventory mismatch, and an alleged Rs 600 crore share-manipulation scheme, officials said.
The searches, which began on June 23 and continued on Wednesday, were carried out at nine locations in Bengaluru and Mumbai as the central agency widened its probe into alleged violations of the Foreign Exchange Management Act (FEMA).
The ED action comes even as the Securities and Exchange Board of India (Sebi) is carrying out an and accounting practices.
During the raids, the ED said it seized incriminating documents and digital evidence, which are now being examined as investigators probe suspected foreign exchange violations.
According to the agency, the investigation has uncovered multiple irregularities relating to overseas investments, foreign trade transactions, inventory records and suspected share manipulation.
One of the ED’s primary allegations is that Rajesh Exports failed to furnish documents related to its foreign transactions, including imports, exports, overseas investments, and the settlement of foreign trade receivables and payables. The absence of these records, the agency said, has made it “almost impossible” to verify the genuineness of the transactions.
Among the transactions under scrutiny is the company’s claimed investment of Rs 1,035 crore in African mining projects. The ED said neither contemporaneous records nor supporting documents relating to the investment were found during the searches or subsequently furnished by the company.
The ED has alleged that the company adjusted around Rs 3,000 crore in foreign trade payments and dues through transactions that lacked transparency.
According to investigators, Rajesh Exports offset receivables against payables involving suspicious overseas counterparties based in the United Arab Emirates and other foreign jurisdictions. The agency is examining whether these transactions were structured to conceal the true nature of foreign exchange movements.
During physical verification at the company’s factory premises, ED officials allegedly found a 40 per cent discrepancy between inventory recorded in factory registers and the actual physical stock available.
The agency said the significant mismatch forms another key aspect of its ongoing investigation.
The ED has also questioned what it described as “disproportionate remuneration” paid to the company’s senior management.
According to the agency, despite Rajesh Exports reporting consolidated revenue of nearly Rs 7.7 lakh crore, its Chief Financial Officer has not drawn any salary since 2020, while its Managing Director was allegedly paid only around Rs 17,000 per month.
Investigators described these figures as inconsistent with normal commercial practices for a company of Rajesh Exports’ reported scale.
The agency further said it had uncovered suspicious block trades in Rajesh Exports shares executed by certain individuals whose names also appear in disclosures published by the International Consortium of Investigative Journalists (ICIJ), indicating possible undisclosed offshore links.
According to the ED, the investigation has so far revealed that more than Rs 600 crore was allegedly siphoned out of India through share manipulation using NRI benamis. The agency said these transactions are being examined as part of the broader FEMA investigation.
The ED action comes against the backdrop of heightened issued earlier this month.
The market regulator has attributed to Rajesh Exports’ overseas subsidiaries between FY21 and FY25 was backed by verifiable records. It has also ordered a fresh forensic audit and barred promoter-chairman Rajesh Mehta from accessing the securities market pending further proceedings.
Sebi’s investigation was triggered by a shareholder complaint filed in March 2024 over large outstanding trade receivables.
According to the interim order, between 97 per cent and 99 per cent of Rajesh Exports’ consolidated revenue during the period under review originated from its overseas subsidiaries and step-down subsidiaries. The regulator said repeated requests for customer-wise sales records, purchase documents, transaction-level data and accounting records were either not fully complied with or yielded incomplete information.
The market regulator has also questioned the accounting treatment adopted by the company’s Swiss subsidiary, Valcambi SA, one of the world’s largest gold refineries, after identifying significant differences between its standalone financial statements and the consolidated revenues reported by the Rajesh Exports group.
Sebi said it could not independently verify the transactions because key supporting records were unavailable. However, it noted that the findings are preliminary and the investigation remains ongoing.
Rajesh Exports has denied any wrongdoing in response to Sebi’s interim order, maintaining that its reported revenues are accurate and asserting that there has been “no adverse conclusion” by the regulator. The company attributed the issues to a “communication gap” and said it is in the process of submitting all relevant documents and clarifications sought by Sebi.
The company has not yet publicly responded to the ED’s search operations or the allegations made under FEMA.