Sebi confirms interim curbs on Rajesh Exports, says financial disclosure concerns remain unresolved

In a confirmatory order dated October 14, the market regulator said Rajesh Mehta will continue to be restrained from buying, selling or otherwise dealing in the securities of Rajesh Exports, directly or indirectly, until further orders. Rajesh Exports has also been directed to continue making true, fair, accurate and complete disclosures of its financial statements, related-party transactions and other material information under securities laws.

The order follows Sebi's June 3 interim order in the matter. The regulator had initiated its examination after receiving a complaint alleging potential financial misrepresentation in Rajesh Exports’ books, particularly with respect to large trade receivables that had remained outstanding for more than two years.

Sebi's investigation covered the period from April 1, 2020 to March 31, 2024, and BDO India Services was appointed as forensic auditor in December 2024.

Rajesh Exports is a listed gold refiner and manufacturer of gold products. The company also sells products in India through wholesale and retail channels, including under the Shubh Jewellers brand. Its group structure includes overseas subsidiaries and step-down subsidiaries, including Global Gold Refineries AG and Valcambi SA in Switzerland.

Sebi said the noticees had not satisfactorily addressed the regulator’s concerns even after written submissions, a personal hearing and additional documents. The order said the scope of the present proceedings was limited to deciding whether the earlier prima facie findings had been rebutted and whether the interim directions should be modified, revoked or confirmed.

The regulator said several information gaps remained. Sebi noted that Rajesh Exports had not furnished information in a complete and usable form to enable independent verification of financial data, including consolidated operations, underlying accounting records and details relating to foreign subsidiaries. The company had cited confidentiality, data-protection requirements and Swiss law restrictions for not furnishing certain information.

Sebi rejected those explanations at this stage. The order said private confidentiality arrangements cannot be used to bypass regulatory obligations, and that the material available did not show that the company had taken all legally permissible steps to provide information sought by the regulator.

A major part of the order deals with Rajesh Exports’ consolidated revenue disclosures. Sebi said the company had disclosed substantially higher consolidated revenues by including revenues attributed to overseas entities, but had not provided party-wise break-ups, sales registers, purchase registers, invoices, purchase orders or other records needed to verify those numbers.

The regulator noted a large gap between the standalone revenue of Valcambi SA and the much higher revenue reflected at the consolidated levels of GGR and Rajesh Exports. The company argued that Valcambi recognised only value addition or processing charges as revenue, while GGR recognised the gross value of gold transactions along with processing charges. Sebi said the explanation did not fully reconcile the difference with supporting records.