Rajesh Mehta says SEBI's interim order reflects a misunderstanding of the gold refinery business model; company submits five years of audited sales data

SEBI Order Triggers Controversy

The chairman of Rajesh Exports, Rajesh J. Mehta, has come out strongly against media reports claiming a ₹15.15 lakh crore fraud at the Bengaluru-based gold company, saying the entire controversy stems from a fundamental misreading of how gold refinery businesses record revenue.

The Securities and Exchange Board of India issued an interim order — running to 109 pages — following a shareholder complaint that alleged discrepancies in the company's financial records. SEBI's observations noted that the company appeared to have inflated 99% of its total reported revenue over a five-year period. However, Mehta is categorical that no final order has been passed and no penalty imposed.

"These are observations, not charges," he said, adding that the matter will be resolved once regulators review the complete documentation.

The Valcambi Factor

At the heart of the dispute is Valcambi, a Switzerland-based step-down subsidiary of Rajesh Exports and one of the world's largest gold refineries. The company sells refined gold bars to central banks and major bullion dealers globally, generating very high turnover with razor-thin profit margins.

Mehta explained the business model with a straightforward example. If Valcambi imports impure gold worth ₹100, refines it, and sells it for ₹101, the total recorded revenue is ₹101 — even though the actual gross profit is just ₹1. Net profit after expenses typically works out to 25 to 50 paise on that transaction.

According to Mehta, SEBI may have mistakenly treated the EBITDA figures as a proxy for gross profit and, finding a large gap with reported sales, concluded the numbers were inflated. "They added up the EBITDA instead of looking at the actual sales data. That's where the confusion started," he said.

The company says it has submitted full, audited sales data for financial years 2020 to 2025 to SEBI and the stock exchanges.

Revenue Structure Explained

Rajesh Exports reports consolidated revenue combining two streams: Valcambi's global bullion sales, which form the bulk of the total figure, and the Indian parent company's standalone revenue from domestic jewellery and bullion operations. The latter has stayed in the range of ₹20,000 to ₹25,000 crore over the five-year period in question.

Consolidated revenue from operations stood at ₹2.58 lakh crore in FY2021, climbing to ₹7.78 lakh crore in FY2026 — figures dominated almost entirely by the Swiss subsidiary's high-volume gold trading.

Forensic Audit and Data Sharing

Mehta pushed back on claims that the company withheld information from forensic auditors, saying the audit has been underway for two and a half years and auditors had access to the office premises for three months. He said the ERP system and books of accounts were made fully available in compliance with applicable rules.

On certain data related to Valcambi's client transactions — specifically, which central banks purchased how much gold — Mehta cited international secrecy laws and non-disclosure agreements. He said disclosing such details would expose competitive strategy and could create complications for sovereign clients. The audited balance sheets of both Valcambi and its holding company Gezear, audited by KPMG, have been submitted to SEBI along with all relevant schedules.

LIC Stake, Promoter Holdings

LIC holds roughly 10% in Rajesh Exports, a stake accumulated gradually over 15 to 20 years through open-market purchases. Mehta pointed out that LIC has not bought a single new share in the company over the past four to five years. He also stated that promoters have never sold shares to LIC or to anyone else — their holding remains unchanged from day one, and the family has in fact purchased additional shares from the market from time to time.

The company is also debt-free, with no outstanding loans to any bank or institution globally.

Company's Next Steps

Rajesh Exports is preparing a detailed legal and factual response to SEBI's interim order. Certified documents and audited balance sheets from Valcambi and Gezear are being resubmitted to the regulator. The company has already filed clarifications with BSE and NSE on June 4, 5, and 6.

Mehta expressed confidence that SEBI's concerns would be fully addressed once the complete documentation is examined. "The moment the atmosphere clears, the stock will return to its real value," he said, urging investors not to panic over what he described as temporary market sentiment.