The Securities and Exchange Board of India (SEBI) has launched a comprehensive investigation into Rajesh Exports Ltd (REL), one of India's largest gold exporters and refiners, following a shareholder complaint that escalated into a major accounting inquiry.
Shareholder Complaint Triggers Broad Inquiry
The investigation began on March 11, 2024, when SEBI received an email from a Rajesh Exports shareholder. The initial complaint highlighted concerns over significant trade receivables that had remained outstanding on the company's books for an extended period. As SEBI delved deeper, the scope of the inquiry broadened considerably.
The regulator requested extensive documentation from Rajesh Exports, including customer and vendor details, debtor and creditor data, subsidiary financial statements, and access to accounting systems. According to SEBI's interim order, many of these requests were either unmet or only partially addressed by the company.
Forensic Audit Challenges and Documentation Gaps
A forensic auditor appointed during the investigation reported substantial difficulties in accessing crucial accounting records, enterprise resource planning (ERP) systems, and journal entries. A significant portion of sampled transactions, exceeding Rs 7,000 crore, could not be independently verified due to incomplete or unavailable supporting documents.
These findings prompted SEBI to extend its scrutiny beyond the initial receivables issue to the company's broader financial reporting practices.
Scrutiny of Overseas Subsidiary Structure
A primary focus of the investigation shifted to Rajesh Exports' complex overseas subsidiary structure. The Indian entity wholly owns REL Singapore, which in turn owns Switzerland-based Global Gold Refineries AG (GGR). GGR controls Valcambi SA, a Swiss gold refinery often cited by Rajesh Exports as its principal operating business.
SEBI observed that these foreign subsidiaries accounted for nearly the entire consolidated business of the group. Between FY21 and FY25, Rajesh Exports reported consolidated revenue of approximately Rs 15.45 trillion, with about Rs 15.18 trillion attributed to its subsidiaries. However, SEBI's analysis revealed significant discrepancies when compared with the audited standalone financial statements of Valcambi SA, which reported annual revenues ranging between Rs 427 crore and Rs 743 crore during the same period.
Rajesh Exports explained that Valcambi's standalone accounts reflected only processing and value-addition income, while GGR recognized the gross value of gold transactions. SEBI, however, found insufficient supporting evidence, reconciliation statements, or transaction-level records to substantiate this accounting treatment. Based on its preliminary findings, SEBI has alleged that nearly Rs 15.15 trillion of revenue attributed to subsidiaries between FY21 and FY25 may have been misrepresented.
Company Contests Allegations
Rajesh Exports has strongly contested SEBI's observations, arguing that information regarding its subsidiaries was adequately reflected in its consolidated financial statements and that additional disclosures were not legally required. The company also cited Swiss confidentiality and data-protection laws as reasons for withholding certain information related to its overseas operations.
SEBI has rejected these explanations, asserting that such restrictions do not exempt the company from complying with Indian regulatory requirements. The case has attracted considerable attention due to the scale of the allegations and the company's institutional shareholding profile, including Life Insurance Corporation of India (LIC) holding approximately 10.8 percent.
The investigation into potential revenue misrepresentation, disclosure lapses, and challenges in verifying overseas operations marks one of India's most closely watched corporate governance cases in recent years.