Rajesh Exports rejects SEBI allegations, says addressing concerns with evidence
The market regulator claimed Rajesh Exports allegedly inflated its consolidated revenues by more than Rs 15 lakh crore over five years by attributing massive revenues to overseas subsidiaries
Rejecting allegations raised in the Securities and Exchange Board of India (SEBI)’s interim order, Rajesh Exports on Friday (June 5) said claims of inflated revenues and irregular share placement to LIC were based on “speculative inferences” and maintained that it is addressing the concerns flagged by the market regulator.
In a regulatory filing, the Bengaluru-based gold jewellery maker stressed that SEBI’s interim order only expressed suspicions regarding certain aspects of its operations and did not contain any conclusive adverse findings against the company.
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Following the order, the shares of Rajesh Exports dropped by nearly 5 per cent on the National Stock Exchange (NSE), on Friday.
Inflated revenues
On June 3, the SEBI barred Rajesh Exports promoter and CEO Rajesh Mehta from dealing in the company's securities, alleging large-scale misrepresentation of financial statements and diversion of funds.
In a 109-page interim order, the regulator found Rajesh Exports allegedly inflated its consolidated revenues by more than Rs 15 lakh crore over five years by attributing massive revenues to overseas subsidiaries, particularly Valcambi SA, despite the subsidiary's audited standalone financial statements showing only a fraction of those amounts.
"The major point misinterpreted about the revenues of the company is totally misplaced," the company said, adding that the huge revenues reported in the consolidated financials are primarily from Switzerland-based Valcambi.
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It is a globally accepted fact that Valcambi, a wholly-owned subsidiary of Rajesh Exports, is the world's largest, finest and most reputed gold refinery. It is engaged in the sale of gold bullion to major banks, central banks and other large bullion entities across the world, it added.
Irregular share placement
Rajesh Exports further noted that "some of the media reports and social media postings about the scam, fraud, inflated revenues, and placement of shares to LIC are totally incorrect, out of place and speculative".
"The company outright rejects all these speculative inferences." LIC has gradually increased its stake in Rajesh Exports and currently holds nearly 11 per cent in the jewellery maker, according to shareholding data on the BSE.
Opposition attacks
Seizing on SEBI's order, the Congress had on Thursday (June 4) attacked the Modi government for a "gigantic scam" and asked if the LIC's substantial stake in Rajesh Exports was driven by instructions from the ruling ecosystem.
Shiv Sena UBT leader Priyanka Chaturvedi had also questioned the company's business model and its foray into EV batteries and getting a 5 GWh manufacturing capacity awarded by the government under the PLI scheme.
Alleviating SEBI’s concerns
Stating that the company was engaged in "transparent and absolutely straightforward operations", Rajesh Exports said neither it nor any of its personnel is involved in "any wrongdoings or misrepresentations". It reiterated that it has never indulged in any "misreporting and all its filings, financial numbers, including revenue, are true and genuine".
The company said it was in the process of mitigating each one of the concerns raised in market regulator SEBI's interim order with explanation, documents and solid evidence.
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"The company is confident that SEBI will appreciate the submissions of the company and clear all the suspicions raised in the interim order," it added.
According to Rajesh Exports, the company is a totally debt-free firm and not dependent on any outside finance for any of its operations.
It has never raised any money from any public offerings except for the initial public issue, raising only Rs 10 crore from the public in 1995. The company has never made any equity placement to any of the domestic institutions.