Rajesh Exports Limited, one of India’s leading gold exporters and jewellery manufacturers, is facing mounting regulatory scrutiny after the Ministry of Corporate Affairs (MCA) directed the Serious Fraud Investigation Office (SFIO) to conduct a comprehensive investigation into the company’s affairs. The development triggered fresh selling pressure in the stock, with shares declining 5 per cent to hit the lower circuit at ₹97.02 on the National Stock Exchange (NSE).
The SFIO has been instructed to complete its investigation within six months and submit a detailed report to the government. The probe is expected to examine multiple aspects of the company’s operations, including corporate governance standards, export transactions, financial reporting practices and other business dealings.
MCA Orders SFIO Investigation
The MCA’s decision to assign the matter to the SFIO marks a significant escalation in regulatory oversight. The specialised investigative agency is expected to scrutinise whether the company complied with statutory requirements relating to financial disclosures, overseas business operations and governance practices.
The investigation comes at a time when Rajesh Exports is already under the scanner of multiple enforcement and regulatory agencies.
Enforcement Directorate Examining FEMA Violations
Earlier this week, the Enforcement Directorate (ED) confirmed that it had conducted search operations at nine premises linked to Rajesh Exports across Bengaluru and Mumbai under the provisions of the Foreign Exchange Management Act (FEMA), 1999.
According to the ED, preliminary findings point towards several irregularities involving the company’s foreign exchange transactions. Investigators alleged that the company failed to produce sufficient documentary evidence relating to imports, exports, overseas investments and the settlement of international trade receivables and payables.
The agency is now examining whether these transactions complied with FEMA regulations and other applicable laws.
₹1,035 Crore Overseas Investment Under Lens
One of the principal transactions under investigation concerns an overseas investment valued at nearly ₹1,035 crore in mining assets located in Africa.
The ED has stated that the company could not provide contemporaneous documentation supporting the investment during the course of the searches. Investigators are examining whether the investment was genuine and whether all regulatory approvals and documentation requirements were complied with.
₹3,000 Crore Overseas Trade Transactions Being Investigated
The agency is also examining trade receivable and payable adjustments amounting to nearly ₹3,000 crore involving overseas entities, including companies based in the United Arab Emirates.
Officials are scrutinising these set-off transactions to determine whether they were executed in accordance with foreign exchange regulations and whether adequate records exist to substantiate them.
Significant Gold Inventory Discrepancy Alleged
Another major issue highlighted by the ED relates to the company’s inventory records.
During physical verification conducted at the searched premises, investigators reportedly found a substantial mismatch between the quantity of gold physically available and the stock reflected in the company’s factory registers and accounting records.
According to the agency, the difference is estimated to be around 40 per cent, prompting investigators to examine the accuracy of inventory reporting and internal controls maintained by the company.
Management Compensation Practices Raise Questions
The ED has also questioned the remuneration structure of Rajesh Exports’ senior management.
According to the agency’s findings, the company’s Managing Director has reportedly not drawn any salary since 2020 despite the company reporting consolidated revenues of approximately ₹7.7 lakh crore during the period.
The agency further noted that the company’s Chief Financial Officer was reportedly receiving a monthly salary of around ₹17,000.
Investigators are examining whether these unusual compensation arrangements indicate broader governance or compliance concerns.
Suspected Share Manipulation Also Under Investigation
Apart from financial and foreign exchange transactions, the ED is also probing suspected manipulation in trading of Rajesh Exports shares.
The agency has alleged that certain block trades involved individuals whose names have appeared in data leaks published by the International Consortium of Investigative Journalists (ICIJ).
According to the ED, preliminary findings suggest that more than ₹600 crore may have been moved outside India through suspected share manipulation involving non-resident Indian (NRI) entities.
Several electronic devices, financial records and documents seized during the search operations are currently being analysed as part of the ongoing investigation.
Regulatory Pressure Continues to Mount
The SFIO investigation adds another layer of regulatory scrutiny for Rajesh Exports, which is already facing proceedings initiated by the Securities and Exchange Board of India (SEBI).
In a recent interim order, SEBI had observed prima facie evidence suggesting possible financial irregularities, including allegations relating to revenue inflation. The capital markets regulator is continuing its own examination of the company’s financial disclosures and accounting practices.
Company Denies Allegations
Rajesh Exports has rejected the allegations made by the enforcement agencies and maintained that its financial statements accurately reflect its business operations.
The company has stated that it is fully cooperating with all regulatory authorities and is providing the necessary documents and explanations required during the course of the ongoing investigations.
With simultaneous proceedings by the SFIO, Enforcement Directorate and SEBI, Rajesh Exports now faces one of the most significant regulatory examinations in its corporate history. The outcome of these investigations could have important implications for the company’s governance framework, financial reporting practices and market confidence.
