The Securities and Exchange Board of India (SEBI) has confirmed its interim directions against Rajesh Exports (REL) and its promoter Rajesh Mehta on Wednesday, alleging continued gaps in financial disclosures, discrepancies in revenue figures and inadequate information on transactions involving related parties.
The markets regulator said Mehta would remain barred from buying, selling or dealing in the company’s securities, directly or indirectly, until further orders. The company has also been directed to provide the information sought by investigators and continue making accurate and complete disclosures of its financial statements and related-party transactions.
Forensic audit
SEBI has also directed a new forensic auditor appointed in the matter to complete its work expeditiously and asked the investigating authority to conclude its investigation without delay.
The confirmatory order follows an interim direction issued on June 3 after SEBI began investigating REL’s financial statements for the period from April 2020 to March 2024, following a complaint about large trade receivables outstanding for more than two years.
Revenue disparity
One of the main concerns is the difference between the company’s consolidated revenue and the standalone revenue of its Swiss subsidiary Valcambi SA, which refines precious metals and sells gold bars.
For FY21 to FY25, REL reported consolidated revenue of ₹15.45 lakh crore, while Valcambi’s standalone revenue for calendar years 2020 to 2024 was ₹3,027.38 crore. SEBI said the disparity of about 99 percent could not be explained by differences in reporting periods.
REL argued that Valcambi recognised the value addition from gold refining and processing as revenue, while its holding company Global Gold Refineries AG included the gross value of gold transactions along with processing charges. However, SEBI said the company had not produced audited accounts showing Valcambi’s revenue on a gross-value basis or sufficient transaction-level documents to reconcile the figures.
The regulator also said that the consolidated financial statements of Global Gold Refineries were voluntarily prepared and did not carry a statutory audit opinion under Swiss law.
Missing records
SEBI said the company had not furnished several records sought during the investigation, including journal-entry data, customer and supplier details, and supporting documents for transactions undertaken through foreign subsidiaries.
In an email cited in the order, REL said digitising hundreds of voucher books containing daily journal entries would be “practically impossible”.
The company maintained that it had cooperated with the investigation and that some information could not be disclosed because of confidentiality obligations and Swiss data-protection laws. SEBI rejected these explanations, saying the company had not demonstrated that the information could not be provided through legally permissible means.
The investigation also covers transactions routed through Mehta’s personal bank accounts and fund transfers involving Elest Pvt Ltd, an entity substantially owned and controlled by him. SEBI has raised concerns about the disclosure and approval of these transactions, as well as dealings involving REL’s subsidiary ACC Energy Storage Pvt Ltd.
The company has disputed allegations of fund misuse, maintaining that the transactions were genuine commercial decisions and that the investments benefited shareholders.
SEBI said the explanations provided so far had not adequately addressed the concerns. It clarified, however, that the findings in the confirmatory order are not a final determination of the allegations. The investigation and any further proceedings will continue in accordance with the law.