Shares of Rajesh Exports hit the 5% lower circuit on Thursday after market regulator Sebi issued an interim order against the gold refiner and its promoter, Rajesh Mehta, over alleged financial reporting irregularities and corporate governance lapses.

Weighed down by the development, Rajesh Exports shares closed at ₹104.65, down 4.99%, with a market capitalisation of ₹3,090 crore. The sell-off was triggered as investors reacted to the regulator’s findings, which include allegations of revenue inflation, inadequate disclosures related to overseas subsidiaries, and non-cooperation during a forensic audit.

How has the company responded?

Responding to Sebi’s action, Rajesh Exports, in an exchange filing, denied the allegations and emphasised that the regulator’s order is only an “interim order” and does not contain any final adverse conclusions. The company stated that “the revenues declared by the company are correct and there is no overstatement of revenues.”

The company further said there appears to be a communication gap and misunderstanding between Sebi and the company, and that it is in the process of submitting all relevant documents to the regulator.

“The company is confident that Sebi, in its wisdom, will clarify the situation and arrive at the correct conclusion based on the authenticated documents that are in the process of being submitted,” it said.

Rajesh Exports also rejected what it described as adverse media reports surrounding the interim order and said it would soon issue a detailed clarification to address market speculation.

What did Sebi find?

Sebi’s action follows a forensic audit initiated after a shareholder complaint regarding long-standing trade receivables. According to the regulator, the audit uncovered significant discrepancies between the standalone operations of the company’s Swiss subsidiary, Valcambi SA, and the consolidated revenues reported by Rajesh Exports.

The interim order alleges that while Valcambi SA reported standalone revenue of about ₹542.68 crore in calendar year 2023, Rajesh Exports disclosed consolidated revenue of ₹2.8 lakh crore. Sebi has prima facie alleged that the company misrepresented an aggregate ₹15.15 lakh crore in revenues between FY21 and FY25 by accounting for gross gold transaction volumes without sufficient commercial justification.

The regulator also raised concerns over undocumented African mining assets and alleged routing of personal trading activities through company accounts, pointing to what it described as serious corporate governance shortcomings.

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