Rajesh Exports: Sent 400 GB docs to Sebi, regulator couldn’t locate files; will resubmit in 15 days

NEW DELHI: Gold refiner and jewelery exporter Rajesh Exports said on Sunday that it had already submitted 300-400 gigabytes of documents to market regulator Sebi but believed the watchdog could not find the correct files, adding that the company would resubmit all the documents sought within 15 days to resolve the issue.

Sebi’s interim order dated June 3 claimed that revenue inflation was $200 million, Rajesh Mehta, founder and chairman of the company, said in an interview to PTI. ₹15.15 lakh crore between FY21-25 – was due to a fundamental accounting error in which the regulator took the company’s EBITDA figures and classified them as revenue.

“We had given them documents worth lakhs (pages) of 300-400 GB in size. I guess they couldn’t find the right documents. That’s where all the confusion took place,” Mehta said.

“They said take EBITDA and come back. EBITDA means gross profit. They said take gross profit and come back. When you look at the numbers ( ₹15.15 lakh crore), they made a huge mistake,” he added.

Mehta explained the alleged error using a jeweler’s analogy. In a high-volume, low-margin gold bullion business like Rajesh Exports, a customer purchasing 2 grams of gold from a showroom will receive an invoice. ₹30,000 generates income.

Gross profit from this transaction ₹1,000 and net profit ₹500. Sebi claimed to have recorded ₹1,000 gross profit instead of revenue figure ₹30,000 top rows.

“Sebi did not comment on the matter.” ₹500 net profit – they accept this figure. But they take ₹1,000 EBITDA and we call that revenue,” he said.

Applying the same logic to Rajesh Exports, the company buys gold at the following prices: ₹100 and selling ₹101 earns Re 1 as gross profit – and Sebi treated Re 1 as revenue instead of full income, Mehta claims ₹101 sales value.

“This is clearly a matter of confusion,” he said.

He also pointed out that Sebi’s own interim order used qualified language. “They themselves said it was their job, we assume, we suspect. So this issue needs to be clarified. Basically, they didn’t say anything as harsh.”

Regarding the logic of inflating revenues, Mehta argued that such manipulations serve no purpose for a company. “No company inflates its revenues. If someone wants to inflate, they inflate their profits. They inflate their profits to get some benefit. If they have claimed or observed an inflation in their top line, it certainly does not help anyone,” he said.

He also said that full disclosure of income is required by law. Mehta said, “If Sebi allows us, I will remove the entire top line. But how can I do this? Because the law asks me to show what is happening. I am showing this.”

Refuting Sebi’s allegation that company funds were diverted through personal accounts and entities linked to the organizer without adequate explanation, Mehta said: “No way. Not a single penny was spent on anything, not a single penny was received by the organiser.”

He added that the company and its founders are 100 percent debt-free and have not pledged shares anywhere in the world in the last 40 years.

The interim order on June 3 also barred Mehta from buying, selling or trading the company’s own securities until further proceedings. Thereupon he said: “I have never done business and I have never done business in my life. I am not disturbed.”

Regarding the decline in stocks after Sebi’s order, Mehta said that the decline was “temporary” and market-related and that prices would recover after the problem is resolved. He said that the company was ready for a new forensic audit and that its offices and books were always open to any kind of inspection.

When asked about the possibility of finalizing the interim order, Mehta said he was confident of a positive outcome.

“There is no such thing as a worst-case scenario because I have full confidence in Sebi’s wisdom. Once we show them the explanations, everything will be fine. I am sure they are not blind, they are smart people. They will convey the order correctly,” he said.

His message to shareholders who had suffered significant losses was: “The company has done nothing wrong. The company’s books are absolutely clear and clean. I am 100 percent confident that shares will return to their original glory, if not today, then in a very short time.”

SEBI could not be immediately reached for comments at the time of filing this report.