SEBI finds glitters of ₹15 lakh crore that aren’t gold

**Akshara** (0:04)
In today's episode, we'll break down two important stories. First, we'll talk about SEBI finding glitters of rupees 15 lakh crore that aren't gold. And then we talk about space, part two, earning a living.
Welcome back to The Daily Brief by Zerodha, where we cut through the noise to help you understand what's actually happening in the most important stories from business and markets. If you're listening to this audio commute on a walk or at the gym, you can also find The Daily Brief as an audio podcast on Spotify, Apple Podcasts or wherever you listen to your podcasts. I am your host Akshara, and today is Monday, 8th June. Coming to the first story.
On June 3rd, SEBI issued a 109-page interim order against Rajesh Exports Limited or REL, a gold retailer and its promoter chairman Rajesh Mehta. SEBI's primary allegation is this, between FY20 to FY2025, REL reported total consolidated revenues of Rs. 15.45 lakh crore, 99.8 of which was flat out misrepresented. Now, to make sense of those numbers, REL's annual revenue in FY2025 was Rs. 4.53 lakh crore. That's the same ballpark as a company like HPCL, which made over Rs. 4.78 lakh crore in FY26.
So REL's stock peaked at Rs. 1028 in February 2023, but was trading at Rs. 104 when the order dropped. It hit the lower circuit right after this order. SEBI estimates that Rs. 12,726 crore of public investor wealth has been eroded. Over 2 lakh shareholders, including LIC, are left holding the bag. But this isn't a single allegation. Behind this number is an elaborate architecture that lays out a multi-layered scheme involving unexplained overseas revenue, questionable trades, and round-tripping through personal bank accounts and some regulatory smoke and mirrors. And this hasn't come out of the blue. A decade ago, the Moneylife team, led by revered financial journalists Deba Shishbasu and Sucheta Dalal, analyzed Arial's books in their own capacity. There were reports from others that something about Arial didn't sit right. And then in 2024, SEBI received a cautionary email from a then Arial shareholder. And that started an investigation whose result is this mammoth order. Let's dive in.
Usually, at the core of most creative financial engineering or tricks sits an elaborate corporate ownership structure where one dark cave leads to another. Arial, turns out, is no exception to this. The parent Arial entity owns Arial Singapore, which in turn owns 95% of a Swiss holding company called Global Gold Refinery's AG or GGR, while the parent entity owns the other 5%.
GGR itself owns 100% of Switzerland-based Valcambi, which actually is one of the world's largest precious metals refineries, processing over 2000 tons of gold, silver, platinum and palladium annually. Arial acquired it in 2015 for roughly $400 million.
Now, in Arial's financials, most of its consolidated revenue comes from its subsidiaries. Its standalone business barely makes 1% of revenue.
Odd, but maybe not illegal.
Except many of the discrepancies flagged by SEBI, including the biggest one, come exactly from this difference. Let's start with the most significant discovery, which involves the Valcambi subsidiary. Now, remember, Valcambi is just a refiner. It doesn't buy or sell gold on its own account. Banks and bullion dealers send their gold to Valcambi for processing, and Valcambi earns a fee. And the gold belongs to other people. Now, Valcambi's audited financials, which are prepared under Swiss law, reflected exactly this. In the calendar year 2023, Valcambi reported revenue of about ₹543 crore. In 2024, it was ₹427 crore. And that's normal for a leading business in this industry. But GGR, the holding company one level above Valcambi, was recording something entirely different. In its consolidated statements, GGR booked the entire market value of the gold passing through Valcambi as its own revenue. For 2023 alone, that came to over ₹2.9 lakh crore. More worryingly, GGR had no actual business operations of its own. Then, REL took GGR's massively inflated numbers and consolidated them into its own Indian financial statements, while keeping Valcambi's actual audited numbers hidden from the public. When SEBI asked REL to explain this, REL claimed Valcambi only recorded processing revenues, while GGR recognized the true and fair sales revenue. SEBI found this commercially implausible, and REL couldn't produce a single document in support of this claim. To add more fuel to the fire, GGR's consolidated statements were never subjected to a statutory audit under Swiss law. They were voluntarily prepared under an internal group accounting manual. KPMG, which is Valcambi's auditor, specifically clarified that its opinion on GGR did not constitute a statutory audit. In effect, REL was funneling unaudited, self-prepared numbers from a shell-holding company into its audited Indian filings. Meanwhile, REL never uploaded the financial statements of any subsidiary on its website. A straight violation of the Companies Act. So when SEBI demanded the data, REL cited the Swiss Federal Act on Data Protection, claiming Swiss law prevented it from sharing corporate financial information with Indian regulators. But SEBI took this apart cleanly, stating that the Swiss law only protects personal data of natural persons, not corporate entities. In fact, GGR sat at the center of many of REL's balance sheet audities. And to justify some of their massive revenues, REL claimed that their corresponding trade receivables were on GGR's balance sheet. But SEBI found no such proof of this.