Rajesh Exports share price falls 5% after SEBI flags ₹15 lakh crore misstatement in accounts

Jewellery maker Rajesh Exports share price fell 5% lower circuit to ₹103.92 apiece on Thursday after the markets regulator Securities and Exchange Board of India (Sebi) alleged that the company has misrepresented almost its entire revenue over a five-year period.

The stock ended the Wednesday's trading session over 3% up to close at ₹110 apiece on NSE.

SEBI's allegations on Rajesh Exports

The SEBI has accused Rajesh Exports of misrepresenting nearly all of its revenue over a five-year period, raising doubts on the reliability of the jewellery manufacturer's financial disclosures.

In a 109-page interim order released on Wednesday, Sebi stated that its preliminary findings suggest the company significantly overstated and misrepresented the scale of its operations and financial performance between FY21 and FY25. The regulator alleged that around ₹15.15 lakh crore, representing 99.8% of the revenue attributed to the company’s subsidiaries during this period, was inaccurately reported.

The investigation was initiated following a shareholder complaint filed in March 2024, which raised concerns about possible financial misstatements linked to substantial outstanding trade receivables.

A key focus of Sebi’s findings is the group’s overseas corporate structure, particularly Switzerland-based Valcambi SA, which Rajesh Exports had identified as its primary operating entity. The company reported that 97–99% of its consolidated revenue was generated through overseas subsidiaries and step-down subsidiaries.

However, Sebi noted a significant discrepancy between the group’s consolidated revenue figures and the standalone audited financial statements of Valcambi SA. According to the regulator, Valcambi’s standalone revenue represented less than 0.5% of the consolidated revenue reported by Rajesh Exports and its holding subsidiary, Global Gold Refineries AG (GGR), despite being portrayed as the group’s principal business operation.

The regulator further alleged that Rajesh Exports repeatedly failed to provide detailed information regarding its consolidated operations, including party-wise data on sales, purchases, debtors, creditors and inventory. The company argued that Swiss data protection regulations and confidentiality obligations prevented such disclosures. Sebi dismissed this explanation, stating that the cited provisions relate to personal data protection and do not supersede disclosure requirements mandated under Indian securities laws.

“A listed entity operating in the Indian securities market cannot rely upon private confidentiality arrangements or foreign data protection provisions to defeat or dilute its statutory disclosure obligations under Indian securities laws,” said the regulator in its interim order.

Apart from concerns in the consolidated financial statements, the order highlights irregularities in the standalone accounts, consolidation procedures, disclosures regarding investments in African gold mining assets, the offsetting of trade receivables against trade payables, and the alleged diversion of company funds.

REL and Rajesh Mehta have been instructed to fully cooperate with the investigation. Additionally, Mehta has been prohibited from trading in shares of Rajesh Exports until further notice.

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.