From A Routine Receivables Query To One Of India’s Biggest Financial Reporting Investigations

What began as a shareholder's complaint regarding long-outstanding trade receivables has evolved into one of the most significant accounting and disclosure investigations in recent Indian capital market history. The Securities and Exchange Board of India (Sebi) has raised serious concerns over the financial reporting, overseas subsidiary disclosures, and fund transfers at Rajesh Exports Ltd, one of India's largest gold refining and exporting companies.

In an interim order issued on June 3, 2026, the market regulator alleged that nearly ₹15.15 trillion worth of revenues reported through overseas subsidiaries between FY21 and FY25 may not have been adequately substantiated. The findings have triggered intense scrutiny of the company’s global operations and governance practices.

How A Shareholder Complaint Triggered The Investigation

The matter traces back to March 11, 2024, when Sebi received a complaint from a shareholder questioning the company's unusually large outstanding receivables.

Initially appearing to be a routine corporate governance concern, the complaint prompted regulators to seek additional information from the company. As the investigation progressed, Sebi expanded its focus to include sales records, purchase transactions, customer data, subsidiary financial statements, accounting systems and transaction-level documentation.

A formal investigating authority was appointed in October 2024, followed by the appointment of forensic auditor BDO India Services in December 2024.

Over the next two years, multiple notices, summons and information requests were issued to the company and its management.

Forensic Audit Raises Verification Concerns

According to Sebi's interim findings, the forensic auditor faced significant challenges in obtaining critical records necessary for independent verification.

The auditor reportedly did not receive complete access to accounting systems, enterprise resource planning (ERP) platforms, books of accounts and journal entries. In addition, many supporting documents requested for transaction verification were either incomplete or unavailable.

The regulator stated that out of transaction samples exceeding ₹7,000 crore, only a limited portion could be fully verified through supporting documentation.

These difficulties prompted Sebi to broaden its investigation beyond receivables and examine whether the company’s reported financial performance could be independently substantiated.

The ₹15.18 Trillion Revenue Question

A central issue in Sebi’s investigation revolves around Rajesh Exports’ overseas corporate structure and the revenues reported through its foreign subsidiaries.

The structure consists of Rajesh Exports Ltd in India, which owns REL Singapore. REL Singapore in turn owns Global Gold Refineries AG (GGR), Switzerland, which ultimately controls Valcambi SA, a globally recognized Swiss precious metals refinery.

According to Sebi, nearly 97-99 percent of Rajesh Exports’ consolidated revenues between FY21 and FY25 originated from these overseas entities.

During the period, the company reported consolidated revenues of approximately ₹15.45 trillion. However, Sebi observed substantial differences between revenues reported at various subsidiary levels and those reflected in the audited financial statements of Valcambi SA.

The regulator questioned how revenues running into several trillion rupees were reported at the group level while Valcambi’s standalone accounts reflected significantly lower revenue figures.

Company Defends Accounting Treatment

Rajesh Exports has disputed Sebi’s observations and maintains that its accounting treatment is consistent with the nature of the global gold refining business.

The company argued that Valcambi’s standalone financial statements primarily capture refining and processing income, while Global Gold Refineries AG records the gross value of underlying gold transactions. According to the company, this explains the apparent discrepancy between reported revenues at different levels of the corporate structure.

However, Sebi stated that the company failed to provide adequate reconciliation statements, ownership records, transaction-level evidence and independent accounting opinions to fully support these explanations.

As a result, the regulator has questioned whether approximately ₹15.15 trillion of reported revenue can currently be independently verified.

The Affluence Shares And Stocks Connection

Another major aspect of the investigation concerns transactions involving Affluence Shares and Stocks Pvt Ltd.

Sebi found that Rajesh Exports reported sales and purchases worth approximately ₹11,487 crore and ₹11,488 crore respectively with Affluence between FY22 and FY24. These transactions accounted for a significant portion of the company’s standalone business activities.

However, according to the regulator, Affluence informed investigators that Rajesh Exports was never its client and that no such transactions had been conducted directly with the company.

Instead, Affluence reportedly stated that it dealt exclusively with promoter Rajesh Mehta in his personal capacity.

This discrepancy has become a key area of investigation as Sebi attempts to establish the true nature of these transactions.

Allegations Of Fund Transfers And Governance Lapses

The interim order also highlights concerns regarding fund transfers between the company and its promoter.

According to Sebi, approximately ₹339 crore was transferred from Rajesh Exports to promoter Rajesh Mehta, with only ₹232 crore reportedly returned. The regulator alleges that these transfers lacked proper board approvals, audit committee approvals and mandatory disclosures.

Additional transactions involving related entities have also come under regulatory scrutiny as part of the broader forensic examination.

Sebi has emphasized that these findings remain preliminary and will be subject to further investigation.

Market Reaction And Investor Concerns

The market reacted negatively to the regulator’s observations. Rajesh Exports shares hit the 5 percent lower circuit following the release of Sebi’s interim order, reflecting investor concerns over the seriousness of the allegations.

The case has attracted significant attention because of the company’s prominent position within India’s precious metals industry and the presence of major institutional investors in its shareholding structure.

Market participants are closely monitoring developments as the investigation progresses.

What Happens Next?

The interim order represents Sebi’s prima facie findings rather than final conclusions.

The regulator has directed Rajesh Exports and promoter Rajesh Mehta to cooperate fully with ongoing investigations and a fresh forensic audit. Rajesh Mehta has also been restrained from dealing in company securities until further orders.

The next phase will include detailed responses from the company, additional forensic reviews, examination of overseas subsidiary records, verification of transaction trails and evaluation of disclosure practices.

Depending on the outcome, Sebi may consider further enforcement actions if violations are ultimately established.

Outlook

The Rajesh Exports case highlights how seemingly routine accounting concerns can evolve into large-scale investigations involving corporate governance, financial reporting and disclosure standards. While the allegations remain subject to further examination and the company continues to contest Sebi’s findings, the case is already being viewed as one of the most consequential financial reporting probes in India's corporate sector.

The final outcome could have significant implications not only for Rajesh Exports but also for regulatory oversight of multinational corporate structures, subsidiary disclosures and revenue recognition practices across Indian listed companies.