The National Financial Reporting Authority (NFRA) has officially initiated a probe into the statutory auditors of gold retailer Rajesh Exports following major financial discrepancies. Speaking at a FICCI conference on Tuesday, July 7, 2026, NFRA Chairperson Nitin Gupta confirmed that the audit watchdog has started its processes but declined to outline a definitive completion timeline.
The probe follows a massive, 109-page ex-parte interim order issued by the Securities and Exchange Board of India (SEBI) on June 3, 2026, which alleged a systematic, multi-year financial misstatement at the Bengaluru-based jewelry giant.
The Massive Revenue Discrepancy
At the center of the regulatory storm is an unprecedented volume of alleged accounting inflation. SEBI’s initial findings indicate that approximately ₹15.15 lakh crore ($182 billion) in consolidated revenue reported over a five-year block—from FY21 to FY25—was prima facie misrepresented.
This figure accounted for an astonishing 99.80% of the entire group’s consolidated subsidiary revenue during that period. Regulators discovered that almost all of the company’s blockbuster top-line numbers were credited to unaudited overseas shell structures and holding entities, which completely failed to provide supporting transaction documentation when audited.
Core Auditor Lapses Under Scrutiny
NFRA’s investigation will specifically target the conduct of the company’s statutory auditors (including recent firms BSD & Co. and P.V. Ramana Reddy & Co.), who certified these multi-lakh-crore consolidated accounts for years without raising adverse remarks or qualifications.
Basic financial red flags went completely unaddressed in past audit cycles, including:
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The Standalone Mismatch: The Indian parent listed entity’s actual standalone business accounted for a marginal 0.8% to 2.6% of the group’s claimed total consolidated revenue.
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Implausible Margins: In FY26, the company claimed a massive consolidated revenue of ₹7,78,989 crore, yet reported a net profit of just ₹112 crore—translating to a razor-thin 0.01% net profit margin and a meager 0.6% Return on Equity (RoE).
Governance and the “Illusion of Correctness”
During his announcement, NFRA Chief Nitin Gupta heavily emphasized the systemic erosion of corporate governance in promoter-driven Indian companies, where independent board members frequently fail to substantively challenge management decisions.
Gupta also issued a modern warning regarding the rapid integration of Artificial Intelligence (AI) and data analytics in accounting functions, cautioning that automated tools can generate an “illusion of correctness.”
“Fluency can be mistaken for correctness,” Gupta stated, warning that automated platforms can easily compress days of critical professional skepticism into a single click of an ‘accept’ button. He maintained that even as corporate functions adopt AI consolidation, every underlying financial estimate, assumption, and material judgment must remain strictly verified and defended by human oversight.
SEBI has already barred Rajesh Exports’ Executive Chairman, Rajesh Mehta, from the securities market and mandated a fresh forensic audit of the company. NFRA’s parallel investigation will now determine the legal and regulatory penalties for the auditors who signed off on the books.
