ED Searches Rajesh Exports Premises Over Alleged FEMA Violations, Flags Stock Mismatch And Foreign Transactions

Mumbai, June 24: The Enforcement Directorate (ED) has conducted searches at nine locations in Bengaluru and Mumbai linked to M/s Rajesh Exports Limited (REL) and its associates as part of an investigation into alleged violations of the Foreign Exchange Management Act (FEMA), a probe that comes weeks after the Securities and Exchange Board of India (SEBI) flagged alleged financial irregularities at the company.

Rajesh Exports is among India's largest gold refiners and jewellery manufacturers and owns Swiss precious-metals refinery Valcambi, one of the world's largest gold refining companies. The group operates across gold refining, bullion, jewellery manufacturing, exports and retail sales through its Shubh Jewellers chain.

During the searches, officials seized documents and electronic devices that are now being examined for evidence of FEMA violations and related financial irregularities.

ED Flags Suspected FEMA Violations

The ED said its searches uncovered multiple suspected FEMA violations, including missing records of foreign transactions, opaque settlement of overseas trade receivables and payables worth around Rs 3,000 crore, a nearly 40 per cent mismatch between recorded and physically available stock, and suspicious share-market transactions allegedly involving offshore entities.

The agency alleged that Rajesh Exports failed to provide documentation relating to imports, exports, overseas investments and foreign trade settlements. Investigators also claimed that the company did not furnish records supporting a purported investment of Rs 1,035 crore in African mining ventures. According to the ED, neither contemporaneous documents relating to the investment were found during the searches nor were they subsequently provided by the company, making independent verification of the transaction difficult.

SEBI Order Preceded Searches

The searches come less than three weeks after SEBI, in an interim order, alleged that the company and its promoters misrepresented revenues amounting to nearly Rs 15.15 lakh crore between FY21 and FY25. The market regulator alleged that a substantial portion of the group's reported overseas revenue was attributed to its Swiss subsidiary Valcambi, while corresponding disclosures did not fully support the figures reported by the listed entity.

The ED also flagged what it described as opaque netting arrangements involving foreign trade receivables and payables worth around Rs 3,000 crore. According to investigators, the company allegedly set off dues against receivables through entities based in the UAE and other overseas jurisdictions. Officials said such transactions could potentially mask the actual movement of funds, making it difficult to trace money flows and verify the genuineness of cross-border transactions.

Stock Mismatch And Trade Scrutiny

Beyond the offshore banking channels, the agency further alleged that a physical verification carried out during the searches revealed a significant mismatch between gold stock recorded in factory registers and the inventory found on the premises. The agency revealed that the actual physical gold stock was 40 per cent lower than the inventory levels officially declared in the company's legal register.

Another aspect under examination relates to the remuneration of key managerial personnel. The ED said certain financial indicators appeared inconsistent with the scale of the company's operations. According to the agency, the company's Chief Financial Officer has not drawn a salary since 2020, while the Managing Director allegedly received only around Rs 17,000 per month despite the company reporting consolidated revenues of approximately Rs 7.7 lakh crore.

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The investigation has also uncovered what the agency described as suspicious block trades in the company's shares. Officials said some individuals involved in these transactions have figured in disclosures examined by the International Consortium of Investigative Journalists (ICIJ), raising questions about possible undisclosed offshore links.

According to the ED, the probe has so far indicated that more than Rs 600 crore may have been siphoned out of India through alleged share-price manipulation involving non-resident Indian (NRI) benamidars.

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