₹17,000 Salary for MD, CFO Without Pay: ED's Rajesh Exports Raid Opens a Can of Worms

On paper, Rajesh Exports is one of India's largest companies by revenue. On the ground, its Managing Director was earning ₹17,000 a month.

That was among the findings of the Enforcement Directorate, which conducted search operations across nine premises linked to the Bengaluru-based gold and jewellery company in Bengaluru and Mumbai. Investigators also found that the company's Chief Financial Officer had not drawn a salary since 2020. The salary figures stand in stark contrast to the company's reported consolidated revenue of approximately ₹7.7 lakh crore.

The ED's searches are the latest escalation in a regulatory case that began with the Securities and Exchange Board of India alleging in June that Rajesh Exports had inflated revenues by ₹15.15 lakh crore over five financial years.

What the ED Found

In a press release posted on X on Wednesday, the ED said its searches uncovered a range of irregularities at Rajesh Exports. Investigators found missing records for overseas transactions, approximately ₹3,000 crore in trade receivables and payables set off against four to five foreign entities based in the UAE and other overseas jurisdictions, which the agency described as having "dubious credentials." They also found a 40% mismatch in stock records and evidence of share-price manipulation involving offshore benamidars.

The ED further found that the company had ostensibly invested more than ₹1,000 crore in African gold mines, with no corresponding entries in the books of accounts of any of its subsidiaries. The agency said the company's major business indicators differed prominently from normal commercial practices and that various incriminating documents and digital evidence had been seized. The investigation is ongoing.

How It Started

The matter first came to light through a shareholder complaint filed with SEBI in March 2024, which flagged a large sum of trade receivables that had remained outstanding for over two years and alleged potential financial misrepresentation in the company's books. SEBI initiated a formal investigation in October 2024 and engaged forensic auditor BDO to examine the company's financial disclosures.

On June 3 this year, SEBI issued an interim order against the company and its promoter-chairman Rajesh Mehta, alleging financial misrepresentation worth ₹15.15 lakh crore across FY21 to FY25, and barring him from accessing the securities market.

Mehta later denied the allegations. "It is an interim order and nothing in it is true...We are in the process of studying it and will prepare a response," he had said.

The Revenue Question

SEBI's central allegation concerns the source and authenticity of the company's reported revenues. Between FY21 and FY25, between 97% and 99% of Rajesh Exports' consolidated revenues were attributed to overseas subsidiaries, with Valcambi SA, a Switzerland-based gold refinery and a key part of the group's international operations, being the most significant contributor.

When forensic auditors attempted to verify these figures against subsidiary-level records, the numbers did not match. The gap between what was reported at the consolidated level and what could be substantiated from underlying records amounted to ₹15.15 lakh crore over the five-year period.

To illustrate the scale of the discrepancy, SEBI pointed to Valcambi's audited standalone revenue for CY2023, which stood at ₹542.68 crore. In the same period, group entity GGR reported consolidated revenue of ₹2.93 lakh crore, while Rajesh Exports reported ₹2.81 lakh crore at the consolidated level.

The company explained that the gap arose because Valcambi recognised only processing income while GGR accounted for gross gold transaction values. SEBI said this explanation was not backed by sufficient documentary evidence. SEBI Whole-Time Member Kamlesh Chandra Varshney said in the interim order, "It is not clear as to how the consolidating entity changes fundamental of accounting by including the market value of goods belonging to third party as its revenue, when the operating entity itself accounts for only value addition."

SEBI also said Rajesh Exports did not provide complete customer records, vendor details, or financial statements of key subsidiaries despite repeated summons. The company's statutory auditors, having committed during depositions to submit audit working papers, subsequently failed to do so. SEBI said this pattern pointed to a deliberate attempt to withhold material information from regulators.

Other Allegations

Beyond the revenue figures, SEBI flagged additional concerns. The company claimed investments worth ₹1,035 crore in gold mining assets in Africa but was unable to produce valuation reports, entity-wise breakups, or reconciliation statements to support those figures.

SEBI also examined transactions between Rajesh Exports and an entity called Affluence Shares and Stocks, where the company had recorded sales of ₹11,487 crore and purchases of ₹11,488 crore. When investigators approached Affluence, the entity denied any business relationship with Rajesh Exports, stating that no such transactions had taken place.

The regulator further alleged that money was moved from company accounts into Mehta's personal accounts and used for derivative trading. Transactions worth ₹7.4 crore were traced to his personal accounts, a portion of which was subsequently returned to the company. These fund movements, SEBI said, were neither approved by the board nor disclosed to investors as related-party transactions. SEBI estimated shareholder wealth erosion linked to the alleged misconduct at up to ₹12,726 crore.

LIC's Exposure

Among the company's largest shareholders is LIC, which holds around 10.8% of Rajesh Exports. When this came to light, Mehta distanced himself from the insurer's investment decisions. "No promoter has ever sold his shares to LIC. The company has never made any placement to LIC. By the buying of shares by LIC, the company or the promoters have never benefited in any manner," he told PTI.

"We don't even know where LIC's office is. We have no contact, no connection. This decision of buying shares through the secondary market is their own decision in a prudent commercial manner," he had added.

SEBI has directed Rajesh Exports and Mehta to submit all sought documents and explanations within 30 days and has ordered the appointment of a new forensic auditor to complete the audit of the company's books. Notably, the Serious Fraud Investigation Office will also soon launch a probe into the company, according to a report by the Economic Times.