ED Raids Rajesh Exports Amid SEBI's ₹15 Lakh Crore Financial Irregularity Probe

ED Raids Rajesh Exports Amid SEBI's ₹15 Lakh Crore Financial Irregularity Probe | Quick Digest
The Enforcement Directorate conducted searches at Rajesh Exports' Bengaluru and Mumbai premises following a SEBI interim order alleging ₹15.15 lakh crore financial misstatements. The investigation, also under FEMA, focuses on massive revenue inflation, particularly involving its Swiss subsidiary Valcambi SA, and alleged fund diversion by the promoter. The company denies all wrongdoing.

Key Highlights

  • ED conducted searches at Rajesh Exports' Bengaluru and Mumbai offices.
  • Searches followed SEBI's interim order on alleged financial misstatements.
  • SEBI flagged ₹15.15 lakh crore inflated revenue involving Swiss subsidiary Valcambi SA.
  • Investigation also probes fund diversion and FEMA violations.
  • Rajesh Exports denies allegations, citing a 'communication gap' with SEBI.
  • Promoter Rajesh Mehta barred from securities trading by SEBI.
The Enforcement Directorate (ED) has launched extensive search operations at multiple premises linked to Rajesh Exports in Bengaluru and Mumbai. This significant action by the federal probe agency comes on the heels of an interim order issued by the Securities and Exchange Board of India (SEBI), which flagged alleged massive financial irregularities and misstatements within the company. The ED's searches, conducted under the Foreign Exchange Management Act (FEMA), are aimed at uncovering potential evidence of money laundering and foreign exchange violations. SEBI's interim order, issued on June 3, 2026, made startling allegations, central among them being a purported overstatement of consolidated revenue by an astounding ₹15.15 lakh crore over a five-year period (FY21-FY25). The market regulator asserted that nearly 97-99% of Rajesh Exports' reported consolidated revenue, primarily attributed to its overseas subsidiaries, most notably Switzerland-based Valcambi SA, lacked verifiable supporting documentation. SEBI's investigation, initiated after a shareholder complaint in March 2024 concerning long-standing trade receivables, brought to light significant discrepancies between the company's consolidated figures and Valcambi's audited standalone financial statements. For instance, while Valcambi's audited revenue for CY2023 was only ₹542.68 crore, Rajesh Exports reported consolidated revenues of approximately ₹2.81 lakh crore for the same period. Furthermore, SEBI alleged several other corporate governance failures and non-genuine transactions. These include claims that company funds, amounting to ₹338.90 crore between April 2020 and September 2025, were routed through Chairman and Managing Director Rajesh Mehta's personal bank account for unauthorized personal derivative trading. The regulator found no loan agreements, board approvals, or other documents to justify these transactions, suggesting intentional layering and concealment of funds. Additionally, SEBI identified non-genuine sales and purchase transactions worth ₹11,487 crore and ₹11,488 crore, respectively, with a broker named Affluence Shares and Stocks between FY22 and FY24, which Affluence reportedly denied executing. Following its interim order, SEBI also imposed restrictions on Rajesh Mehta, barring him from buying, selling, or dealing in Rajesh Exports' securities until further notice. The regulator also mandated a forensic audit, a process during which Rajesh Exports reportedly showed systematic non-cooperation by refusing to provide essential data like ERP access, journal entries, and subsidiary information, often citing Swiss data protection laws for Valcambi. However, SEBI rejected this argument, clarifying that Swiss laws apply to individuals, not corporate financial records. Rajesh Exports has vehemently denied all allegations, asserting that its financial disclosures are accurate. Chairman Rajesh Mehta clarified that the discrepancies highlighted by SEBI stem from a "communication gap" and a misunderstanding by the regulator, specifically alleging that SEBI confused Valcambi's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) with its revenue. He claimed that Valcambi, as the world's largest gold refiner, generates substantial revenue, and the ₹3,000 crore figure cited by SEBI for Valcambi represents only its value addition, not its gross revenue. The implications of these allegations are significant for India's financial markets and investors. State-owned Life Insurance Corporation of India (LIC) holds a substantial 10.8% stake in Rajesh Exports, alongside nearly two lakh retail investors, placing a considerable amount of public money at risk. Additionally, lender Canara Bank has reportedly initiated debt recovery proceedings against the company. The ongoing investigations by both SEBI and ED underscore a severe breakdown in corporate governance and raise serious questions about the financial transparency of a company once considered a major success story in the Indian gold industry. Multiple credible sources including Moneycontrol, NDTV Profit, Daily Pioneer, Telegraph India, The Hindu, Reuters, Fortune India, and The Economic Times have reported on these developments, corroborating the central facts of the ED searches and SEBI's ongoing probe into Rajesh Exports. The story has garnered significant media attention due to the enormity of the alleged financial misrepresentation and the involvement of prominent regulatory and enforcement agencies. The company's stock has faced extreme volatility since the regulatory crackdown, hitting 52-week lows.

Frequently Asked Questions

What are the main allegations against Rajesh Exports?

The primary allegations against Rajesh Exports involve alleged financial misstatements totaling ₹15.15 lakh crore in consolidated revenue over five fiscal years (FY21-FY25). SEBI also flagged issues like undocumented assets, use of corporate funds for promoter's personal derivative trading, and non-genuine transactions, particularly involving its Swiss subsidiary Valcambi SA.

Which regulatory bodies are investigating Rajesh Exports?

Both the Securities and Exchange Board of India (SEBI) and the Enforcement Directorate (ED) are investigating Rajesh Exports. SEBI initiated the probe and issued an interim order, while the ED is conducting searches under the Foreign Exchange Management Act (FEMA).

How has Rajesh Exports responded to the allegations?

Rajesh Exports has strongly denied all allegations, stating that its financial reporting is correct. Chairman Rajesh Mehta has attributed the discrepancies to a 'communication gap' with SEBI and claimed that the regulator confused Valcambi's EBITDA with its actual revenue.

What is the role of Valcambi SA in this controversy?

Valcambi SA, Rajesh Exports' Swiss subsidiary and one of the world's largest gold refiners, is central to the allegations. SEBI claims that nearly all of Rajesh Exports' consolidated revenue came from overseas subsidiaries, primarily Valcambi, but found vast discrepancies when comparing these figures with Valcambi's audited standalone financials.

What are the implications for investors in Rajesh Exports?

The allegations and ongoing investigations have led to significant market volatility for Rajesh Exports' stock, which hit 52-week lows. Public sector entities like LIC, along with numerous retail investors, hold significant stakes in the company, making them susceptible to potential losses if the allegations are proven.

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