Gold refiner and jewellery manufacturer Rajesh Exports Ltd (REL) allegedly inflated its consolidated revenues by more than Rs 15 lakh crore over five years by attributing massive revenues to overseas subsidiaries, according to an interim order by Sebi. Following this revelation, the Congress has raised questions over Life Insurance Corporation’s (LIC) 10.8 per cent stake in the company.The regulator has raised serious concerns over what it described as a prima facie misrepresentation of the company’s financial position, noting that almost entire of the REL’s reported revenues were attributed to overseas subsidiaries whose financial statements were not made publicly available.On its part, the REL on Thursday denied any financial irregularities, saying its reported revenues were correct and that there seemed to be a communication gap between the regulator and the firm.”The revenues declared by the company are correct, and there is no over-stating of revenues. There seems to be some type of communication gap and confusion between Sebi and the company,” it said in a BSE filing.According to Sebi, the REL reported consolidated revenues of about Rs 15.18 lakh crore between FY21 and FY25. Of this, approximately Rs 15.15 lakh crore, or 99.8 per cent of the revenues attributed to subsidiaries, could not be reconciled with the audited standalone financial statements of Switzerland-based Valcambi SA, the group’s principal operating subsidiary.Valcambi SA, a precious metals refiner, earns revenue from refining services and the sale of branded bullion products. However, its audited standalone accounts, prepared under the Swiss law and audited by KPMG SA, recorded only processing charges or value addition as revenue.Sebi found a stark mismatch between these audited figures and the revenues reported by Rajesh Exports and its intermediary holding company, Global Gold Refineries (GGR).For instance, in calendar year 2023, Valcambi SA reported a standalone revenue of around Rs 543 crore, while the GGR and the REL reported consolidated revenues of approximately Rs 2.93 lakh crore and Rs 2.81 lakh crore, respectively. As a result, Valcambi’s standalone revenues accounted for less than 0.5 per cent of the revenues reported at the consolidated level.The regulator questioned how a holding company with no independent operating activities could recognise gross transaction values running into several lakh crore rupees when the operating subsidiary itself recognised only processing fee as revenue.When asked to explain the discrepancy, the REL argued that Valcambi accounted only for processing income, whereas the GGR recognised the gross value of gold transactions along with processing charges.Sebi, however, found the explanation prima facie untenable. It noted that Valcambi’s audited financial statements did not recognise the gross value of gold transactions as revenue and reflected only processing income.Meanwhile, Congress leader Jairam Ramesh on Thursday questioned the LIC for investing in the REL.“What is particularly disturbing is that LIC owns around 10.8 per cent of Rajesh Exports. Banks, too, have considerable exposure to this clearly politically influential company. How could the LIC have missed such a huge fraud taking place in a company in which it has a substantial stake? This raises the question of whether LIC’s acquisition of such a substantial stake was driven by instructions from the ruling ecosystem,” said Ramesh. (With PTI inputs)