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₹15.15 lakh crore. Not an ordinary number.
Yes, that's the figure at the centre of SEBI's latest action against Rajesh Exports, one of India's biggest gold exporters.
What's happening: SEBI has accused Rajesh Exports of significantly overstating its business operations over several years through its overseas subsidiaries.
According to the regulator, the alleged revenue misrepresentation adds up to a staggering ₹15.15 lakh crore.
The Bengaluru-based company built its reputation as a global gold powerhouse, refining precious metals and exporting jewellery across the world.
But the company is now under some intense scrutiny.
Market action: Rajesh Exports' shares hit the 4.99% lower circuit after SEBI barred the company and its chairman, Rajesh Mehta, from accessing the securities market until the investigation is complete.
What exactly is happening: according to the regulator, funds from the company were routed to Mehta's personal account for derivative trading through stockbroker Affluence Shares and Stocks.
SEBI claims these transactions were later disguised in the company's books as regular sales and purchase transactions.
According to SEBI, nearly every rupee of revenue reported by Rajesh Exports came from its foreign subsidiaries, particularly Swiss company Valcambi SA. Because these subsidiaries generated such a large share of the company's business, regulators are taking a close look at how their numbers were reported.
SEBI has further alleged that the company misstated standalone revenues worth ₹12,557 crore between FY21 and FY24.
It claims that derivative trades executed by Mehta in his personal capacity were recorded as company sales of ₹11,487 crore and purchases of ₹11,488 crore.
The regulator has also alleged that exchange-rate fluctuations worth ₹867 crore and ₹716 crore were booked as revenue and purchases, respectively. Even interest income earned from mutual funds and fixed deposits was allegedly classified as revenue from operations.
Not the first time: this isn't Rajesh Exports' first brush with regulators. The company has faced scrutiny before, including a SEBI ban in the early 2000s, investigations into alleged circular trading, and repeated questions from stock exchanges over compliance and disclosure issues.
Why it matters: this isn't just a story about regulators and promoters. The fallout could affect millions of ordinary investors.
One of Rajesh Exports' largest shareholders is state-owned Life Insurance Corporation of India (LIC), which owns about 10.8% of the company.
LIC's shares also slipped following the news.
And that's important because LIC's investments are ultimately backed by policyholders' premiums. In other words, many households may have indirect exposure to Rajesh Exports through their insurance savings.
SEBI estimates that the alleged misconduct may have eroded shareholder wealth by as much as ₹12,726 crore.
Speaking to Moneycontrol, Chairman and Managing Director Rajesh Mehta dismissed the allegations, saying the order is only interim in nature and that ‘nothing in it is true.’
