The Securities and Exchange Board of India (Sebi) has cracked down on gold refiner Rajesh Exports Limited (REL) and its promoter Rajesh Mehta following a forensic audit that unearthed massive revenue inflation, undocumented African gold mines, and personal trading routed through corporate accounts.

The interim order exposes a severe breakdown in corporate governance, characterized by systematic non-cooperation with forensic auditors BDO India Services Pvt Ltd.

Core deficiencies: Ghost turnover and mines that don’t exist

The regulator's investigation, initiated after a shareholder complaint regarding long-standing trade receivables, uncovered deep discrepancies between the standalone operations of the company’s crown-jewel Swiss subsidiary, Valcambi SA, and the astronomical consolidated figures presented to Indian investors.

1. The ₹15 lakh crore revenue illusion

While 97% to 99% of REL's consolidated revenues stem from overseas entities, the company completely omitted publishing separate audited financial statements for these subsidiaries. The forensic audit revealed that for CY 2023, Valcambi SA recorded a true standalone revenue of only ₹542.68 crore (reflecting value-added processing fees). Yet, REL reported consolidated revenues of ₹2,80,676 crore.

Sebi has prima facie accused REL of misrepresenting an aggregate of ₹15,15,385 crore between FY 2020-21 and FY 2024-25 by double-counting gross gold transaction volumes without any commercial or risk-bearing justification.

2. The "Affluence" personal trading scheme

On a standalone level, REL claimed it executed ₹11,487 crore in gold sales and ₹11,488 crore in purchases with broker Affluence Shares and Stocks Private Limited.

The investigation revealed a reality: Affluence denied ever executing bulk gold trades with the company. Instead, Sebi found that REL had routed corporate funds to Rajesh Mehta’s personal accounts. Mehta utilised these funds to execute personal gold derivative trades via Affluence, suffered losses, and returned the remaining balances to REL. The company then improperly logged his personal trading volumes as corporate bulk gold sales to artificially inflate its business turnover.

3. Fictitious African mining assets

The company informed stock exchanges that it held "Other Non-Current Investments" worth ₹1,035.27 crore as of March 31, 2023, representing an "Investment in Gold Mines in Africa." Auditors found this asset to be entirely untraceable across the financials of REL standalone or its direct holding subsidiaries.

Exact legal directives

Rather than a broad-brush market exclusion, Sebi's specific directions focus heavily on structural restrictions, asset freezes, and mandatory corporate cleanups.

Sebi did not bar Rajesh Mehta from the entire stock exchange; instead, it localised the trading ban strictly to his own company's equity to prevent potential manipulation. The Sebi order said:

"II. Noticee no. 2 [Rajesh Mehta] is hereby restrained from buying, selling or dealing in securities of Rajesh Exports Limited, either directly or indirectly, in any manner whatsoever, until further orders;"

Ban on corporate governance roles

To protect public funds, Sebi has barred Mehta from exercising corporate control or managing public capital across the wider market:

"...hereby restrained from associating himself as a director or Key Managerial Personnel (KMP) of any listed public company or any Sebi registered intermediary which intends to raise money from the public, until further orders."

The demat freeze

To lock down existing assets while the final forensic calculations are concluded, the regulator has ordered an immediate freeze on the accounts of both the entity and the promoter:

"...directed to freeze the demat accounts of Noticee no. 1 [REL] and Noticee no. 2, until further orders... It is clarified that the equity shares of REL held by Noticee No. 2 in his demat accounts shall remain frozen."

Operational mandates

For Rajesh Exports Limited as a corporate entity, the interim order functions not as an exit from commercial markets, but as a strict enforcement mechanism to compel disclosure.

REL has been ordered to immediately cease withholding information under the pretext of foreign data protection laws and grant the investigating authority complete, unhindered access to its ERP systems, internal books, and foreign subsidiary records. Furthermore, the company must immediately publish all outstanding separate audited financial statements of its subsidiaries on its official website.

The noticees have been granted 21 days from the receipt of the order to submit their formal replies and file objections before the regulator. If they fail to provide a legally robust explanation, these interim measures will remain in force through the completion of Sebi's final enforcement actions.