How Sebi uncovered a Rs 15 lakh crore revenue hole at Rajesh Exports

A shareholder complaint, a Swiss refinery and years of unexplained revenues have culminated in one of the most significant accounting investigations in India's corporate history

In Short

• A shareholder email in March 2024 triggered the regulator's forensic scrutiny
• Overseas subsidiaries contributed more than 98% of group revenue in several years
• Investigators said customer data, invoices and transaction records were incomplete

It began with a complaint that could easily have gone unnoticed. In March 2024, the Securities and Exchange Board of India (Sebi) received an email from a shareholder of Rajesh Exports alleging potential financial misrepresentation linked to large trade receivables that had remained outstanding for years.

Two years later, that complaint has snowballed into what could become one of the biggest accounting controversies India has seen since Satyam.

At the centre of Sebi's interim order is a startling allegation: Rajesh Exports may have misrepresented about Rs 15.15 lakh crore of revenue between FY21 and FY25 through its overseas subsidiaries and step-down subsidiaries.

The figure is so large that it almost obscures the more important story.

This is not a case about missing cash. Nor is it, at least for now, a case where regulators have accused the company of siphoning away Rs 15 lakh crore.

Instead, Sebi is asking a deceptively simple question: can the revenues that Rajesh Exports reported over the years actually be verified?

The answer to that question may ultimately determine whether this becomes an accounting dispute, a governance failure or something much bigger.

For years, Rajesh Exports occupied a curious position in India's corporate landscape.

The Bengaluru-based company routinely reported revenues that placed it among the country's biggest businesses by turnover. In FY25 alone, consolidated revenue stood at more than Rs 4.23 lakh crore. During the five years under scrutiny, the company reported cumulative consolidated revenue of nearly Rs 15.45 lakh crore.

Yet despite those enormous figures, Rajesh Exports rarely commanded the kind of valuation typically associated with companies of such scale.

Investors generally accepted the explanation. Gold refining and bullion trading are notoriously low-margin businesses. Huge volumes often translate into modest profits. The business model seemed unusual, but not necessarily implausible.

Sebi's investigation suggests the real story may have been elsewhere.

The regulator's first major observation was that the Indian business was not driving the numbers.

Between FY21 and FY25, nearly all of Rajesh Exports' reported revenues came from overseas subsidiaries and step-down subsidiaries. In several years, these entities accounted for more than 98% of the group's consolidated revenue.

That means investors buying Rajesh Exports stock were not really valuing a Bengaluru-based jewellery and bullion company. They were largely valuing businesses operating thousands of kilometres away.

And that is precisely where Sebi ran into trouble.

As investigators sought to verify the reported revenues, they repeatedly asked for customer-wise sales details, vendor information, purchase records, invoices, confirmations and transaction-level documentation relating to the overseas operations.

According to the interim order, much of that information was either not provided or remained incomplete despite repeated requests.

The forensic auditor appointed by Sebi encountered similar difficulties.

Access to accounting systems was restricted. Important records were unavailable. Customer and vendor information remained elusive. In many cases, transactions could not be independently verified because supporting documents were missing, incomplete or inaccessible.

The deeper investigators dug, the stranger the picture became.

Eventually, attention shifted to Switzerland.

At the heart of Rajesh Exports' global structure lies Valcambi SA, one of the world's most recognised precious-metals refiners and arguably the crown jewel of the group's overseas empire.

Rajesh Exports repeatedly told investigators that Valcambi was the principal operating entity within the group. Other entities, including Global Gold Refineries AG (GGR), were described largely as holding companies without significant operating activity.

On the face of it, the structure appeared straightforward.

But when Sebi compared the financial statements of these entities, the numbers simply did not add up.

According to the regulator, Valcambi's audited standalone accounts showed revenues running into only a few hundred crore rupees annually.

Yet higher up the chain, GGR's consolidated financial statements reflected revenues running into several lakh crore rupees.

The gap was extraordinary.

In calendar year 2023, Valcambi reported standalone revenue of roughly Rs 543 crore. During roughly the same period, GGR reported consolidated revenue of nearly Rs 2.93 lakh crore. Rajesh Exports itself reported consolidated revenue of around Rs 2.81 lakh crore for FY24.

That is where Sebi's central question begins.

If Valcambi was the principal operating business, how did revenues of a few hundred crore rupees suddenly become revenues of several lakh crore rupees once they moved up the corporate structure?

Rajesh Exports offered an explanation rooted in accounting.

According to the company, Valcambi's standalone financial statements reflected only processing charges and value addition earned from refining activities. The consolidated accounts, meanwhile, recognised the gross value of gold transactions along with processing income.

The distinction may sound technical. It is anything but.

Imagine a refinery processing gold worth Rs 1,000 crore for a customer. If the refinery merely provides a service, it may recognise only the fee it earns. If it owns the gold and bears the associated risks, it may recognise the full transaction value.

The difference can transform a few crore rupees of revenue into thousands of crores.

For Sebi, however, the problem was not merely the accounting explanation. It was the absence of records supporting it.

The regulator says it did not receive sufficient evidence relating to ownership of gold, customer relationships, inventory risk, transaction trails and other documentation that could explain how such large revenues were ultimately recognised.

In essence, Sebi is arguing that the numbers being reported at the group level were not backed by records that investigators could independently verify.

That conclusion forms the basis of the regulator's claim that approximately Rs 15.15 lakh crore of revenue attributed to overseas entities may have been misrepresented during the period under review.

The implications go beyond accounting.

One of Sebi's more striking observations concerns transparency.

Despite overseas subsidiaries generating virtually all of the group's reported revenues, investors had limited visibility into many of those entities. According to the regulator, several subsidiary financial statements were either unavailable or not disclosed publicly.

As a result, shareholders could see the final consolidated numbers but had little ability to examine the businesses producing them.

That information gap now sits at the heart of the controversy.

For years, investors focused on Rajesh Exports' headline revenues, profit margins and valuation multiples. Sebi's order suggests a different question may have deserved greater attention: how much visibility did investors actually have into the overseas businesses generating those revenues?

It is a question that extends well beyond a single company.

As Indian firms become increasingly global, regulators are grappling with structures that span multiple jurisdictions, legal systems and reporting frameworks. Consolidated accounts may provide the final picture, but confidence in those numbers ultimately depends on whether the underlying businesses can be independently examined.

That is what makes the Rajesh Exports case significant.

At this stage, Sebi's findings remain interim observations. The company will have an opportunity to challenge the allegations and present its defence. The regulator's conclusions will be tested through further proceedings.

But the questions raised by the order are unlikely to disappear anytime soon.

For years, Rajesh Exports was known for the sheer size of its reported revenues.

Now, it is the source of those revenues that has become the story.

And until regulators get the answers they are looking for, one of India's biggest reported corporate revenue stories will remain overshadowed by doubts about whether the numbers behind it were ever what they seemed.

- Ends