How a ₹15 Lakh Crore Financial Fraud Unravelled
Rajesh Exports Scam Explained: How a ₹15 Lakh Crore Financial Fraud Unravelled
This is indeed one of the most staggering corporate
governance and financial misrepresentation stories to hit the Indian capital
markets in years. On June 3, 2026, the Securities and Exchange Board of
India (SEBI) issued a massive 109-page interim order that completely blew the
lid off the financials of Bengaluru-based gold refiner Rajesh Exports (REL).
The numbers being thrown around are almost hard to process:
SEBI alleges that 97% to 99% of the company's consolidated revenue was
inflated, amounting to a mind-boggling ₹15.15 lakh crore ($158 billion)
over a five-year period (FY21 to FY25).
To understand how we got here and why the market is reeling,
let’s break down the anatomy of this crisis from its inception.
1. The Trigger: How the House of Cards Was Exposed
The downfall didn't happen overnight, but the official
investigation began with a spark from the public:
- The
Shareholder Complaint (March 2024): A retail investor flagged a major
red flag in the company’s books—massive "trade receivables"
(unpaid customer bills) that had been sitting untouched for more than two
years. In healthy companies, cash from gold sales moves fast. Stale
receivables usually mean the sales only exist on paper.
- The
Stonewalling: SEBI initiated a preliminary probe and appointed BDO
India Services as forensic auditors in late 2024. Instead of
cooperating, Rajesh Exports and its promoter, Rajesh Mehta, essentially
locked the door. They refused access to their ERP accounting systems,
withheld journal entries, and didn't provide complete vendor/customer
details.
2. The Core Illusion: The "Swiss Subsidiary"
Mismatch
The biggest piece of the puzzle lies in how Rajesh Exports
reported its international business. The company owns Valcambi SA, a
massive and highly reputable gold refinery in Switzerland.
[Rajesh Exports Consolidated Financials (FY21-FY25)]
└── Reported
Revenue: ~₹15.45 Lakh Crore
├── Standalone India Business:
~₹26,500 Crore (Under 3%)
└──
Overseas Subsidiaries: ~₹15.18 Lakh
Crore (Over 97%)
│
[The Reality
Check by SEBI]
Valcambi SA
actual audited revenue by KPMG:
~₹3,027 Crore
When SEBI compared what Rajesh Exports claimed its
subsidiaries earned versus Valcambi's actual audited financials in Switzerland
(audited independently by KPMG), they found a black hole. While Rajesh Exports
claimed over ₹15.18 lakh crore from overseas operations, the actual
audited revenue of the Swiss refiner was just around ₹3,027 crore.
The Excuse: The company claimed that a holding entity
(Global Gold Refineries AG) recognized the full gross value of the gold traded,
while Valcambi only booked processing fees. SEBI rejected the lack of
documentation backing this up. They also tried to hide behind "Swiss Data
Privacy Laws" to avoid sharing records, an argument SEBI flatly threw out.
3. The "Opaque Netting" and Fictitious Trades
The phrase "fictitious trades and opaque netting"
refers to how the company allegedly scrubbed its books when those old, fake
receivables started looking too suspicious.
- Fictitious
Trading Volume: SEBI flagged transactions with an entity called Affluence
Shares and Stocks Private Limited. Rajesh Exports recorded ₹11,487
crore in sales and ₹11,488 crore in purchases with them. When
investigators knocked on Affluence's door, the counterparty completely
denied that these transactions ever took place.
- Opaque
Netting: Between FY23 and FY24, Rajesh Exports suddenly wiped out ₹2,914
crore of ancient, unpaid receivables from four overseas buyers. They
did this through a "netting arrangement"—claiming these buyers
were also suppliers, so they just cancelled out what they owed each other.
There were virtually no credible supporting documents to prove these debts,
or the netting agreements were legitimate.
4. Personal Slush Fund and Fund Diversion
Beyond inflating revenue to look like a global powerhouse,
money was reportedly leaking directly out of the company:
- Between
April 2020 and September 2025, ₹338.90 crore was transferred from
Rajesh Exports directly into the personal bank accounts of promoter Rajesh
Mehta. While some was returned, over ₹106 crore remains entirely
unexplained.
- Even
worse, SEBI found that ₹7.4 crore of corporate funds was routed to
cover personal derivatives trading losses incurred by Rajesh Mehta. These
were recorded in the company’s books as regular business transactions,
hidden entirely from the Audit Committee.
5. Where Were the Auditors?
The market is rightly asking how the statutory auditors, BSD
& Co., signed off on these numbers year after year.
- They
failed to challenge the lack of supporting documents for trillions of
rupees in overseas revenue.
- They
didn't flag the sudden netting and write-offs of billions in trade
receivables.
- They
missed (or ignored) massive fund diversions to the promoter's personal
accounts.
Because of this severe dereliction of duty, SEBI has
officially forwarded its interim order to the National Financial Reporting
Authority (NFRA)—India’s auditing watchdog—to initiate strict disciplinary
action against the auditors.
Market Fallout & Current Status
The destruction of investor wealth has been absolute. At its
peak in February 2023, Rajesh Exports was a market darling trading at over
₹1,028 per share, boasting a market cap of over ₹30,000 crore. Following the
SEBI order, the stock plunged to its 5% lower circuit, trading around ₹104.
Public institutions and retail investors have borne the
brunt of this collapse. Notably, the Life Insurance Corporation of India
(LIC) held a massive 10.8% stake in the company, while nearly 2 lakh small
retail investors held over 14%.
What happens next? Rajesh Mehta is currently barred
from buying, selling, or dealing in the securities market. The company has been
given 30 days to hand over all withheld accounting data, and a brand-new
forensic auditor is being appointed by SEBI to do a comprehensive, unhindered
autopsy of the books.
