India’s market regulator has accused jewellery maker Rajesh Exports of reporting substantially overstated revenues across several years, asserting that 15.15 trillion rupees - equivalent to $158.30 billion - were inflated through dealings with overseas entities that were not properly verified or disclosed.
The Securities and Exchange Board of India (SEBI) announced on Wednesday that it has barred the company and its owner from participating in securities markets until its probe is completed.
According to SEBI’s order, between fiscal years 2020-21 and 2024-25 an overwhelming share - roughly 97% to 99% - of Rajesh Exports’ consolidated sales was recorded as originating from subsidiaries outside India, with Valcambi SA, a Switzerland-based firm, identified as the principal operating entity in those consolidated figures. The regulator found that the company systematically did not make public the financial information of its subsidiaries.
SEBI pointed out an apparent contradiction in Valcambi’s reported position: the subsidiary was portrayed as the primary operating unit in consolidated disclosures, yet Valcambi’s own audited standalone financial statements showed only negligible revenues.
The regulator quantified the misrepresentation at approximately 15.15 trillion rupees, which constituted about 99.80% of the revenues attributed to subsidiaries during the specified fiscal period.
SEBI also identified what it described as potentially fabricated transaction entries. The order states Rajesh Exports recorded 114.87 billion rupees in sales and 114.88 billion rupees in purchases with Affluence Shares and Stocks Private Limited. SEBI reported that Affluence denied any such transactions took place.
Those entries were, according to the regulator, linked to the owner Rajesh Mehta’s personal derivative trades and were used to inflate reported turnover without corresponding economic activity.
In addition to alleged misstatements of revenue, SEBI said Rajesh Exports transferred 3.39 billion rupees of company funds into Mehta’s personal accounts, including amounts used for derivative trading, without obtaining board or audit committee approval and without proper related-party disclosures. The regulator further stated that a total of 9.26 billion rupees was transferred without the requisite approvals or disclosures.
SEBI estimated the combined effect of the alleged revenue misrepresentation and unauthorized fund diversions has eroded shareholder wealth by 127.26 billion rupees.
Implications
The regulator’s action has immediate regulatory consequences for Rajesh Exports and its owner, with market participation restricted while SEBI completes its investigations. The findings focus on the company’s consolidation practices, the treatment of an overseas subsidiary, and the adequacy of disclosures concerning related-party transactions and fund movements.