SEBI Confirms Rajesh Exports Curbs: ₹15.45 Lakh Crore Revenue Gap Unexplained, Mehta Ban Stays

SEBI Whole Time Member Kamlesh C. Varshney has confirmed the interim directions against Rajesh Exports Limited and its chairman Rajesh Mehta. The confirmatory order dated 14 October 2026 (WTM/KV/CFID/CFID-SEC6/32770/2026-27), running to 77 pages, keeps in force all three directions of the ex-parte interim order of 3 June 2026: the company and its promoter must keep cooperating with the investigating authority, Rajesh Mehta remains barred from buying, selling or otherwise dealing in the company's securities, and the company must keep making accurate and complete disclosures of its financial statements and related party transactions under the LODR Regulations. The order records, in paragraph 111, that although some information was furnished after June, the majority of the information SEBI asked for has still not been provided.

The June order had set out, on a prima facie basis, that about ₹15,15,385 crore, or 99.80 per cent of the consolidated revenue attributed to the company's subsidiaries for FY 2020-21 to FY 2024-25, could not be verified, and that on a standalone basis sales of ₹11,486.60 crore and purchases of ₹11,488.42 crore routed through Affluence Shares and Stocks Private Limited made up 66.02 per cent of standalone sales and 67.11 per cent of standalone purchases for FY 2021-22 to FY 2023-24. It also flagged foreign exchange fluctuation of ₹866.60 crore booked under revenue from operations, a related ₹716.18 crore booked in cost of materials consumed, and interest income of ₹204 crore shown as operating revenue. The investigation covers 1 April 2020 to 31 March 2024, began with a complaint about financial misrepresentation and trade receivables outstanding for more than two years, and has had BDO India Services Private Limited as forensic auditor since 3 December 2024.

The noticees filed written replies on 16 June 2026. A hearing fixed for 11 August 2026 was adjourned at Mr Mehta's request so that he could engage counsel; the hearing took place on 25 August 2026 and further written submissions with annexures followed on 26 August 2026. The confirmatory order works through each of the ten heads of the interim order, tests whether the replies rebut the prima facie findings, and concludes on every head that they do not. The order is explicit that none of this is a final determination; the question at this stage is only whether the interim directions should be confirmed, modified or revoked.

The ₹15.45 lakh crore consolidated revenue and the Valcambi gap

The central number is the comparison between Rajesh Exports' consolidated revenue of ₹15,44,898.77 crore over five years and the standalone revenue of ₹3,027.38 crore reported by Valcambi SA, the Swiss refinery held through Global Gold Refineries AG (GGR). REL Singapore holds 95 per cent of GGR and REL the remaining 5 per cent, and REL Singapore itself reported nil revenue from operations. That leaves a gap of roughly 99 per cent that the company had to explain.

The company's explanation was that Valcambi recognises only its value addition as revenue while GGR recognises the gross value of gold plus processing charges, that the consolidation followed Ind AS including the principal-versus-agent analysis, that reporting periods differ (REL and ACC Energy Storage follow a March year end, GGR a December year end), and that a higher revenue figure would in any case have lowered margins, so investors gained nothing from it. SEBI's reply is that Valcambi could not produce any audited account prepared on a gross-value basis, that an entity which only processes gold is unlikely to be able to account for the gross value of the metal, that a difference of reporting periods cannot explain a 99 per cent gap repeated across five years, and that a company's valuation does not depend solely on profit margin. The order also notes that the KPMG report on GGR's 2023 consolidated statements says in terms that it does not represent a statutory audit opinion on those statements for the purposes of Swiss law.

Swiss confidentiality, Section 136 and the auditors' working papers

On the non-disclosure of subsidiary information, the company had argued that Article 17 of the Swiss Federal Act on Data Protection required a request to the Swiss data protection commissioner before customer and vendor details could be shared, and that customer and supplier names had been redacted in an email of 27 August 2024 for that reason. SEBI holds that the Swiss statute protects the personal information of natural persons, not information about legal persons, that there is no evidence the company ever asked Valcambi to seek that permission, and, relying on the Supreme Court in SEBI v. Rajkumar Nagpal (Civil Appeal No. 5247 of 2022), that statutory obligations override private confidentiality agreements. The provisions in play are Sections 128(1) and 136(1) of the Companies Act, 2013 and Regulation 46(2)(s) of the LODR Regulations, which require the separate audited accounts of each subsidiary to be placed on the listed company's website. The order adds that the fact that the company's auditors did not possess the working papers of the foreign subsidiaries does not mean the company itself could not obtain them.

Affluence, the nominee agreement and interest income in revenue

On the standalone numbers, the dispute turns on the Affluence transactions. Affluence told SEBI that Rajesh Exports was not its client and that its dealings were with Rajesh Mehta personally. The company then produced an "Agreement for nominee facilitation of MCX trading and banking transactions", signed on plain paper by managing director Prashant Mehta, to show that Mr Mehta acted only as a conduit for company trades. SEBI received a communication from the Enforcement Directorate containing Prashant Mehta's statement in which he categorically denied signing the document, and he had separately written to SEBI that his signature was forged. No board authorisation for the arrangement was produced, no related party disclosure was made, and at the hearing Mr Mehta could not provide transaction-wise details. The order describes the authenticity of the agreement as being under prima facie suspicion.

For the ₹866.60 crore of exchange fluctuation and ₹204 crore of interest shown as revenue from operations, the company relied on the Karnataka High Court's decisions in CIT v. Rajesh Exports Ltd (ITA No. 1/2009, 14 October 2014) and CIT v. Motorola India Electronics (11 December 2013). SEBI points out that those judgments concern the deduction under Section 10B of the Income-tax Act, 1961, not the presentation of financial statements, and states that under Ind AS the inclusion of interest income under revenue from operations is strictly non-compliant for a non-financial entity. The company also told SEBI that it has had no export-import operations since 2020. On the transactions with Harshil Enterprise and Vienna Multiventures, the order's answer is that the mere recording of a transaction in the books of account does not, by itself, establish the underlying transaction.

Ind AS 110 eliminations and the ₹1,035.27 crore African gold mines

Rajesh Exports shows investments of about ₹7,745.42 crore in GGR, but furnished no date-wise, party-wise or instrument-wise break-up. Ind AS 110 requires intra-group investments, receivables and payables to be eliminated on consolidation, and SEBI's point is that the company's explanations about CHF and USD conversion and exchange rate movements say nothing about whether those eliminations were actually made; no reconciliation was offered. The annual report for FY 2022-23 disclosed, on a consolidated basis, an investment of ₹1,035.27 crore in gold mines in Africa that appears neither in REL's standalone statements nor in those of REL Singapore nor in GGR's consolidated statements. The company's reply that the investment was held through foreign subsidiaries and varied with business requirements did not name the subsidiary, produce an entity-wise break-up or a valuation report, and the order holds that the bare submission that an investment may have been held through a foreign subsidiary does not establish its existence.

Receivables set off against payables without agreements

Adjustments equal to 98 to 99 per cent of the company's standalone trade receivables for FY 2021-22 to FY 2023-24 were made against payables to four overseas entities. The company's case is that its debtors and creditors overlapped, that creditors agreed during the Covid disruption to accept payment from debtors, that written confirmations exist, that cash actually moved, and that Ind AS 32 permits offsetting where there is a legally enforceable right and an intention to settle net. SEBI's findings are that no formal agreement was produced for any of the four entities, that a single Canara Bank letter covering one of them refers to a square-off decision taken later because of Covid, that several invoices predated the realisations by years and some go back to FY 2012-13, that some invoices were with counterparties different from the debtors whose receivables were settled, and that nothing substantiated physical gold receipts in FY 2022-23 or FY 2023-24. The order concludes that the company has failed to establish a presently enforceable right of set-off, which is the condition Ind AS 32 actually requires.

Funds through Rajesh Mehta's personal account, Elest and ACC Energy Storage

The company disclosed remuneration of only ₹1.20 lakh a year to Rajesh Mehta, and in FY 2020-21 showed a ₹50 lakh loan outstanding to him without disclosing the underlying transactions as related party transactions. Substantial amounts moved to his son Siddharth Mehta, who has no role in the company, including credit card reimbursements routed through his account. There were also large undisclosed transfers with Elest Private Limited, a company substantially owned and controlled by Mr Mehta. ACC Energy Storage Private Limited, once wholly owned by Rajesh Exports, is now held 51.05 per cent by the company and 48.95 per cent by Elest after a dilution in FY 2024-25, and ACC invested ₹262 crore in Elest during that year with no valuation or terms on record.

The company's defence was that these were disclosure lapses rather than misuse: the transactions were conduit-based and commercial, no funds were retained, the company bought one crore Elest shares for about ₹200 crore at a premium and foreign funds later put about ₹990 crore into Elest at a valuation it says is around ₹3,000 crore, REL and Elest invested ₹153 crore and about ₹147 crore in ACC, ACC paid Elest a refundable deposit of ₹655 crore for technology and infrastructure, and Elest lent the company ₹75.15 crore at 4.5 per cent for two years. It also explained two specific routings through Mr Mehta's account: margin money for commodity trades after earlier MCX litigation, and a pre-deposit of about ₹77 crore that the Karnataka High Court required in the company's dispute with Canara Bank, routed through the chairman's account so that the company's own account would not be disclosed. The order treats that last explanation as an admission; as Bar & Bench reported, SEBI wrote that it raises questions on the way the company is governed as it is knowingly hiding facts from the courts. Routing company money through a promoter's personal account is a transfer of resources within Section 2(76) and Section 188 of the Companies Act, 2013 and Regulation 2(1)(zc) of the LODR Regulations whatever the ultimate use, and later appreciation in Elest's value does not show that the original transactions were authorised or disclosed.

The principal heads, the figures and where each stands after the hearing are summarised below.

Why the restraint continues and what happens next

The noticees' general submissions were that there was no mens rea, that neither the company nor Mr Mehta traded in the company's shares, that no specific investor was shown to have been harmed, and that the Supreme Court in Reliance Industries Limited v. SEBI (Civil Appeal No. 4015 of 2020) requires injury and wrongful intention for a fraud finding. SEBI answers that the Supreme Court recognised two scenarios, one where injury is established and a second where blatant misconduct and the surrounding circumstances show wrongful intention without proof of injury, and that the interim order listed fourteen circumstances placing this case in the second category. That investors rely on published financial information, rather than on whether the promoter traded, is why the absence of trading does not rebut concerns about the accuracy of disclosures. The restraint on Mr Mehta is described as preventive, justified by his large shareholding and by the volume of company transactions that passed through his personal accounts.

Paragraph 113 therefore confirms three directions with immediate effect and until further orders: the noticees must provide the information listed in Annexure A within the time the investigating authority specifies; Rajesh Mehta remains restrained from dealing, directly or indirectly, in Rajesh Exports securities; and the company must make accurate, complete and transparent disclosures of its financial statements, related party transactions and other material information under the LODR Regulations. The forensic auditor appointed pursuant to the interim order is directed to complete its work expeditiously, and the investigating authority to complete the investigation without being influenced by this order. No date is fixed for the final order. The interim order had named the company's statutory auditors as P V Ramana Reddy & Co and BSD & Co, and the confirmatory order states that audit and accounting treatment do not answer concerns about the underlying information.

For practitioners, the sequence from here is the one SEBI has followed in other listed-company cases this year: an investigation report, a show cause notice and a final order that can impose debarment and disgorgement, as in the Tarapur Transformers final order of August 2026, or a revocation where the investigation does not bear out the prima facie view, as happened for 30 noticees in the Bharat Global Developers matter some twenty months after the interim order. Until then the company's quarterly results, the forensic audit report when it is received, and any disclosure the company makes under Regulation 30 about the investigation are the documents to watch. Business Standard's report of 14 October 2026 notes that requests on import-export invoice adjustments, supporting correspondence and the Mehta counterparty transactions were still partially fulfilled or pending when the order was passed.

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