The Enforcement Directorate (ED) has reportedly conducted searches at premises linked to Rajesh Exports in Bengaluru, days after the Securities and Exchange Board of India (SEBI) made explosive allegations of financial irregularities involving the company.

The enforcement action follows SEBI’s interim order earlier this month, in which the market regulator alleged that Rajesh Exports had inflated its revenues by approximately ₹15.15 lakh crore through transactions involving unverified overseas entities. The regulator subsequently barred company founder and chairman Rajesh Mehta from participating in the securities market pending completion of its investigation.

SEBI alleges massive revenue inflation

According to SEBI’s findings, the Bengaluru-headquartered gold refiner and jewellery exporter allegedly overstated revenues over several years, raising concerns about the accuracy of its financial disclosures and potential investor deception. The regulator has ordered a forensic examination of the company’s books and directed Rajesh Exports to cooperate fully with investigators.

The allegations triggered a sharp fall in the company’s stock price, with shares hitting lower circuits in multiple trading sessions as investor confidence weakened.

Company denies wrongdoing

Rajesh Exports has strongly denied the allegations and maintains that its reported revenues are genuine. The company has stated that the dispute stems from what it describes as a misunderstanding regarding revenues generated by its Swiss subsidiary, Valcambi.

The company has also indicated that it intends to contest SEBI’s findings and defend its accounting practices.

ED probe adds new dimension

The ED’s searches mark a significant escalation in scrutiny surrounding the company. While SEBI’s investigation focuses on securities market violations and disclosure norms, the ED typically examines potential offences related to money laundering and financial crimes under the Prevention of Money Laundering Act (PMLA).

The outcome of both investigations could have far-reaching implications for one of India’s largest gold refiners and exporters.