Rajesh Exports Fails to Submit Documents to Sebi, Plans Resubmission in 15 Days

Rajesh Exports Denies Revenue Inflation Allegations, Sebi's Order Rooted in Accounting Error

New Delhi: Rajesh Exports, a leading gold refiner and jewellery exporter, has refuted the allegations of revenue inflation by markets regulator Sebi. In a statement, the company said it had already submitted 300-400 gigabytes of documents to Sebi but believed the watchdog had been unable to locate the correct files. The company has promised to resubmit all sought documents within 15 days to resolve the matter.

The controversy began on June 3, when Sebi issued an interim order alleging revenue inflation of ₹15.15 lakh crore over FY21-FY25. Rajesh Exports' founder and chairman, Rajesh Mehta, attributed the alleged error to a fundamental accounting mistake. According to Mehta, Sebi had taken the company's EBITDA figures and classified them as revenue. EBITDA stands for earnings before interest, taxes, depreciation, and amortization, which represents the company's gross profit.

Mehta explained the alleged error using a jewellery shop analogy. In a high-volume, low-margin gold bullion business, a customer buying 2 grams of gold at a showroom would receive a bill of ₹30,000, which constitutes the revenue. The gross profit on that transaction would be ₹1,000, and the net profit ₹500. Mehta alleged that Sebi had recorded the ₹1,000 gross profit as the revenue figure rather than the ₹30,000 top line.

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Mehta also noted that Sebi's own interim order used qualified language. "They themselves have said, we assume, we suspect that this is their business. So, this has to be clarified. Basically, nothing as harsh as they have come out with it."

The company's shares hit the lower circuit after the Sebi order, but Mehta said the fall was "temporary" and market-driven. He expressed confidence that prices would recover once the matter was resolved.

Rajesh Exports is ready for a fresh forensic audit and has offered to open its offices and books for any inspection at any time. Mehta said he was confident of a favourable outcome from Sebi, and that the company's books are "absolutely clear and clean."