Bengaluru: Gold refiner and jewellery manufacturer Rajesh Exports Limited has strongly denied allegations of revenue inflation raised by the Securities and Exchange Board of India (SEBI), asserting that there has been no overstatement of revenues and attributing the issue to a communication gap with the market regulator.
The company’s response comes after SEBI’s interim order alleged that Rajesh Exports may have misrepresented consolidated revenues amounting to approximately ₹15.15 lakh crore during the period between FY2020-21 and FY2024-25.
Company rejects allegations
In a regulatory filing, Rajesh Exports stated that the revenues reported by the company are accurate and supported by documentation.
The company said there appears to be a misunderstanding between SEBI and its management regarding the financial information under review.
According to the filing, Rajesh Exports is currently providing additional documents and clarifications sought by the regulator and remains confident that the matter will be resolved once all relevant records are examined.
The company expressed confidence that SEBI would arrive at the correct conclusion after reviewing the complete set of authenticated documents being submitted as part of the ongoing process.
How the investigation began
The investigation originated from a shareholder complaint received by SEBI in March 2024.
The complaint reportedly raised concerns regarding substantial outstanding trade receivables reflected in the company’s financial statements. Following the complaint, SEBI launched a formal investigation covering the period from April 2020 to March 2024.
As part of the probe, the regulator appointed BDO India Services to conduct a forensic audit of the company’s books and financial transactions.
SEBI’s findings raise concerns
In its interim order, SEBI stated that preliminary findings and the forensic review had uncovered what it described as serious discrepancies in the company’s reported revenues.
The regulator alleged that nearly 97 to 99 per cent of the company’s consolidated revenue during the review period may have been inflated. The alleged inflation amounted to approximately ₹15.15 lakh crore, representing nearly the entirety of the company’s reported consolidated revenues over the period under scrutiny.
SEBI described the preliminary findings as highly unusual and said the scale of the alleged discrepancies warranted closer examination.
Access to records under scrutiny
A major concern highlighted by SEBI relates to the availability of financial records during the forensic audit process.
According to the regulator, investigators and auditors faced difficulties accessing key accounting systems and supporting documentation necessary to verify a significant portion of the company’s transactions.
SEBI alleged that several critical records requested during the investigation were either incomplete, unavailable or not provided in a timely manner.
As a result, the forensic auditor reportedly faced challenges in independently verifying numerous transactions recorded in the company’s financial statements.
Company seeks to clarify position
Rajesh Exports has maintained that it is fully cooperating with the regulatory process and is in the process of submitting additional information to address the concerns raised.
The company has not accepted the findings outlined in the interim order and insists that its reported revenues accurately reflect its business operations.
Management has stated that once all documentation is reviewed, the regulator will gain a clearer understanding of the transactions under question.
Market implications
The case has attracted significant attention due to the magnitude of the alleged discrepancies and Rajesh Exports’ prominent position in India’s gold refining and jewellery sector.
The outcome of the investigation could have implications for corporate governance standards, financial reporting practices and investor confidence in listed companies.
For now, SEBI’s findings remain preliminary, and the investigation continues. The final determination will depend on the regulator’s review of additional evidence and explanations submitted by the company.