Chairman of Rajesh Exports said – Not a scam of ₹15.15 lakh crore: There was a mistake in understanding the figures; LIC has not bought shares of the company for 5 years

Question 5: What is the revenue model of gold refinery business?

answer: The turnover in gold business is huge, but the profit margin is very low. Let us understand this with an example. Suppose Valkambi imported impure gold worth ₹100 from the mines. He processed it in his refinery and purified it and sold it in the market for ₹ 101.

In this situation, the total sales of the company will be ₹ 101, while the gross profit will be only ₹ 1. After deducting all the expenses, the net profit remains only 25 to 50 paise. SEBI took this ₹1 gross profit as the basis and considered the remaining huge sales as missing, whereas it was part of the turnover.

Question 6: How does the revenue model of Rajesh Exports work?

answer: A company’s total revenue comes from two main sources, which are combined to provide ‘consolidated’ figures to the stock exchange:

Question 7: Did the company not cooperate with forensic auditors and hide the data?

answer: This is wrong because the forensic audit has been going on for 2.5 years. We have fully cooperated with the company’s auditors and have provided access to all necessary financial records as per the regulations. Forensic auditors remained sitting in the office for 3 months. The claims of not giving access to the ERP system and books of accounts to forensic auditors are completely false.

Question 8: What to say about the transfer of ₹ 338 crore to the personal account of the promoter?

answer: This transaction was completely transparent. Complete details and explanation as to which business reason this money came from and why it went back has been given to SEBI.

Question 9: Have the promoters made any personal use of the company’s money?

answer: The promoters have not withdrawn even a single rupee from the company for their personal use. On the contrary, Rajesh Exports has been a company where the promoters have always funded the company from their own pockets when needed. There has been no misuse of company funds or personal benefit.

Question 10: LIC has 10% stake in the company. Did this cause loss to common investors?

answer: LIC has been gradually accumulating shares in our company for the last 15 to 20 years. They have been buying a small amount from the open market every year. The most important thing is that for the last 4-5 years LIC has not purchased a single new share of our company. This investment is very long and old. There is no loss to any common investor in this.

Question 11: Has the company or promoters sold their shares directly to LIC?

answer: Neither the company nor the promoter has sold even a single share to LIC till date. The number of shares held by the promoters on the first day is the same even today. In fact, we have bought more shares from the market from time to time because we have full confidence in our company. Whatever shares have been taken by LIC, they have been purchased directly from the open market through the stock exchange.

Question 12: Panic selling is taking place in shares due to which common investors are scared. What advice would you give them?

answer: I would like to tell investors that whatever pressure is being seen on shares is only due to external environment and rumours. The company’s performance is very strong and we will perform well in future also. There is absolutely no need for investors to panic or panic. It is just a temporary wind. Sometimes it seems that someone is deliberately creating such a situation so that they can buy our shares at a lower price. As soon as this environment calms down, the stock will return to its original value.

Question 13: Is there any additional benefit by showing larger sales figures?

answer: No, rather the opposite happens. If I unnecessarily inflate the revenue and my profit remains the same, then my profitability percentage will reduce. For example, if you earn Rs 10 on Rs 100, the profit appears to be 10%. But if you forcibly show Rs 10,000 to the salespeople and the profit remains only Rs 10, then the profit will be only 0.1%. By increasing sales it is our loss. If SEBI says don’t show revenue, show only gross profit, then we will stop showing revenue from tomorrow. We don’t need fake numbers to impress a bank.

Question 14: Does Rajesh Export have any debt with any bank or institution?

answer: Our company is a completely debt-free company. We do not have to pay a single rupee to any bank, institution or entity in the world. On the contrary, we have to take money from many people around the world. When we have not taken any loan from anywhere and are running the entire business on our own, there is no need for us to tamper with the numbers. All our financial accounts are absolutely clean.

Question 15: What is the further update on the responses sent to BSE and NSE?

answer: We had sent a reply to BSE and NSE on 4th, after which necessary clarifications have been given on 5th and 6th also. We have also issued a press release in this regard. We are handing over to them the audited balance sheet and complete sales data of the last 5 years.

Question 16: What is your explanation on the allegations of hiding the information of foreign subsidiary by citing Swiss data protection rules?

answer: We have submitted all audited balance sheets of our Swiss subsidiaries along with complete schedules. The balance sheet is audited by reputed global firm KPMG. As far as withholding certain specific data is concerned, it comes under Non-Disclosure Agreement and International Secrecy Law.

Question 17: What is the information that cannot be shared and why?

answer: According to international rules, how much gold was sold to the Central Bank of which country is an international secret. It cannot be made public because it lets the business’s competitors know the strategy and can also create problems for the concerned governments. This is highly confidential data under secrecy law. Apart from this, all the necessary and valid data related to the business is already present in the audited balance sheet.

60 year old Rajesh J. Mehta is a resident of Bengaluru and is the founder and chairman of Rajesh Exports.

Question 18: What will be the next step of the company in this matter?

answer: The company is responding to SEBI’s interim order legally and factually. All the audited balance sheets and certified documents of Valkambi and its holding company Gezear are being resubmitted to SEBI. The company is confident that after seeing these documents, SEBI’s doubts will be completely cleared and the matter will soon be cleared.

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