Rajesh Exports says it will resubmit documents to SEBI, disputes EBITDA listed as revenue

Rajesh Exports said it plans to resubmit documents sought by Sebi within 15 days. The gold refiner and jewellery exporter said it had already shared 300-400 gigabytes of records. The company said the regulator may have missed the correct files. Rajesh Exports said it wants to close the issue quickly and clear doubts.

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The company’s founder and chairman, Rajesh Mehta, said Sebi’s June 3 interim order was based on an accounting mix-up. The order alleged revenue inflation of Rs 15.15 lakh crore over FY21-FY25. Mehta said the regulator treated EBITDA as revenue. Mehta said this mistake led to the large number seen in the order.

Rajesh Exports Sebi order dispute over EBITDA and revenue

"We had given them 300-400 GB documents, running into lakhs of pages. I think they have not been able to find the correct documents. The whole confusion has happened there,\" Mehta said. \"They have taken the EBITDA and termed it as revenue. EBITDA means gross profit. They have taken the gross profit and termed it as revenue. Looking at the number Rs 15.15 lakh crore, they have made a huge mistake,\" he added.

Mehta explained the issue using a showroom billing example. Mehta said a 2-gram gold purchase could be billed at Rs 30,000. Mehta said that bill value is revenue. The gross profit could be Rs 1,000 and net profit Rs 500. Mehta alleged Sebi counted Rs 1,000 as revenue, not Rs 30,000, in its analysis.

\"Sebi has not commented on the Rs 500 net profit - they accept that figure. But they are taking the Rs 1,000 EBITDA and calling it the revenue,\" he said. Mehta gave another illustration from bullion trading. Mehta said the firm buys gold at Rs 100 and sells at Rs 101. Mehta said Sebi treated Re 1 as revenue, not Rs 101.

Rajesh Exports Sebi order language and clarification request

\"It is a clear matter of confusion,\" he said. Mehta also pointed to wording in Sebi’s interim order. \"They themselves have said, we assume, we suspect that this is their business. So, this has to be clarified. Basically, nothing as harsh as they have come out with it.\" Mehta said clearer accounting context should settle the dispute.

Mehta said inflating revenue made little sense for any company. \"No company will inflate their revenues. If anybody wants to inflate, they will inflate their bottom line. They will inflate their profit to get some benefits. If they have alleged or observed an inflation of top line, which is absolutely no use for anybody,\" he said.

Mehta said the company reports revenue because laws require full disclosure. \"If Sebi permits us, I will remove the whole top line. But how can I do that? Because the law wants me to show what is happening. I am showing that,\" Mehta said. The company said it will resubmit records to address the regulator’s concerns.

Rajesh Exports Sebi order and allegations on funds and promoters

Mehta rejected claims that company funds moved through personal accounts and promoter-linked entities. \"Not at all. Not a single penny has been rooted through anything, not a single paise has been taken by the promoter.\" Mehta also said the company and promoters were 100 per cent debt-free. Mehta added that shares were never pledged anywhere in the world in 40 years.

The June 3 interim order barred Mehta from buying, selling or dealing in Rajesh Exports securities pending further steps. \"I never trade, and in my life, I have never traded. I am not bothered.\" Mehta also said the company would accept a fresh forensic audit. Mehta said offices and books were open for inspection at any time.

Mehta said the lower circuit move in shares after the Sebi order was market-driven and temporary. Mehta said prices would recover after the matter gets resolved. Asked if the interim order could become final, Mehta said the outcome would be favourable. \"There is no worst-case scenario because I am fully confident about the wisdom of Sebi. Once we show them the clarifications, everything will go. I am sure they are not blind people; they are intelligent people. They will pass the order in a correct manner,\" he said.

Mehta also addressed shareholders who saw sharp value erosion. \"The company has done no wrong. The companys books are absolutely clear and clean. I am 100 per cent confident, if not today, within a very short period of time, the shares will go back to their original glory.\" Sebi could not be reached immediately for comments when the report was filed.

With inputs from PTI