- ED raided nine Rajesh Exports locations in Mumbai and Bengaluru over FEMA violations
- Over $20 million was illegally transferred abroad using proxy share transactions
- Physical gold inventory was 40% lower than company records, raising concerns
The Enforcement Directorate (ED) conducted raids at nine locations connected to Rajesh Exports in Mumbai and Bengaluru, sources told NDTV Profit on Tuesday.
The operation was carried out under the Foreign Exchange Management Act (FEMA) over suspected breaches of foreign exchange regulations involving the company and its promoters. ED's probe uncovered several share transactions executed through proxy holders. Investigators determined that more than $20 million had been illegally transferred abroad.
Additionally, the physical gold inventory was found to be around 40 per cent lower than the amounts recorded in the company's books.
Authorities are examining cases where trade receivables were adjusted against purported gold imports. Around Rs 3,000 crore in such receivables were offset against these imports, which the agency views as potentially fabricated. The agency also identified investments exceeding Rs 1,000 crore by the firm in African gold mines that do not appear in the accounts of any subsidiaries.
The ED flagged the offsetting of approximately Rs 3,000 crore in trade receivables and payables against four to five overseas entities it considers to have questionable backgrounds. In a separate interim order, the Securities and Exchange Board of India (SEBI) stated that Rajesh Exports had overstated its consolidated revenues by Rs 15.15 lakh crore between FY21 and FY25. This was mainly done by assigning large revenue figures to foreign subsidiaries, especially the Switzerland-based Valcambi SA, even though the subsidiary's own audited accounts reflected far smaller amounts.
SEBI highlighted what appeared to be a misrepresentation of the company's financial health, as almost all reported revenue came from overseas units whose detailed financial statements are not publicly disclosed.
Rajesh Exports founder and Chairman Rajesh Mehta rejected the allegations, attributing the issue to a misunderstanding by the regulator.
"SEBI has taken the EBITDA of Valcambi and considered it as revenue. That is the entire confusion," he explained.
Mehta said that Valcambi accounts for 97-99 per cent of the group's consolidated revenues and dismissed claims that its standalone revenue was as low as 0.50 per cent of the reported figure.
"That 0.50 per cent is its EBITDA, not its revenue," he clarified. He added that audited financial statements of Global Gold Refinery (GGR), Valcambi's holding company and certified by KPMG, were provided to SEBI.
In its order, SEBI has barred Rajesh Exports and Rajesh Mehta from accessing the securities market until the investigation concludes.
