SEBI’s searing report on the accounting irregularities indulged in by Rajesh Exports Ltd (REL) exposes a multi-layered deception that went undetected by the auditors and institutional investors.
Aside from SEBI’s incriminating findings (see table), quite a few numbers and metrics in RELs financial statements defy accounting logic. For example, capital turnover ratio of 2,698 per cent, a good 136 per cent higher than any company (non-financials) in the Nifty 500 and FY25 revenue of ₹4.2 lakh crore that would have ranked it in the top 10 amongst listed companies in terms of revenue while it had market cap of a small cap stock.
SEBI’s findings
The key among SEBI’s findings is the questionable nature of ₹15.4 lakh crore worth of REL’s revenue, spread over a five-year period from FY21 to FY25, while the actual revenue could roughly be total to a mere ₹3,000 crore.
REL is a gold refiner and manufacturer of gold products. Its corporate structure and consolidated revenue as reported are given in the chart and in the table respectively. REL’s own standalone revenue, as in row ‘B’ (subject matter of another allegation) appears small against the consolidated revenue — implying that 97-99 per cent of the group’s revenue is accounted for by the revenue of REL’s subsidiaries.
While subsidiary Valcambi SA (Switzerland) is identified as the principal operating entity of the group, the rest of the entities are either just holding companies or ones with dormant operations. Hence, it is reasonable to assume that almost the entire group revenue is contributed by Valcambi SA (see row ‘D’ in table).
Valcambi SA’s standalone books were audited under Swiss law by KPMG SA. While Valcambi SA accounted only for value addition in the refining process, its holding company accounted transactions on a gross basis — that is, recognise the value of gold received for refining as purchases and that of the refined gold as revenue — giving rise to the large revenue figures at the group level. This inconsistency in accounting treatment is what SEBI calls ‘prima facie untenable’.
Given that Valcambi SA itself accounts only for the value addition, it is questionable how a non-operating holding company can recognise revenue differently — at the market value of goods belonging to third parties. SEBI argues that REL has not furnished sufficient grounds such as bullion ownership records, inventory risk allocation or accounting opinions to justify the differential accounting treatment. GGR’s consolidated books were prepared voluntarily and KPMG SA’s opinion thereon does not constitute a statutory audit opinion under Swiss law. Further, it is not clear whether the accounts of main subsidiary REL-Singapore which accounts for almost entire revenue of REL were audited at all.
Unaudited accounts
The FY25 annual report has a statement from Auditors BSD & Co that they had not audited the financials of any of the subsidiaries but had instead relied on a set of memorandum consolidated financials of foreign subsidiaries that the board of REL itself had prepared for their unmodified opinion (clean report), implying that the subsidiary accounts were un-audited. Something like this gives ample space for gross misrepresentation.
Another important point in SEBI’s findings is how the company claimed to have bought a mine in Africa for around ₹1,000 crore in FY23, but records reveal no identifiable investment. Further the cash flow statement in FY25 shows a 55 times increase in operating cash flows over FY24. Interestingly, almost entirety of it is from bizarre fall in trade receivables in a year in which revenue went by 51 per cent and trade payables rose sharply. Such big changes in trade receivables and trade payables adding to net cash inflows raises doubts on veracity.
Retail shareholders seem to have got sucked into all this drama. In the last three years as the shares crashed, retail shareholding increased from around 1.6 to over 14 per cent! And not to forget LIC, which still owns a sizable 10.8 per cent in REL (as of March 2025), marginally lower from around 11.04 per cent in March 2023.
Published on June 5, 2026
