Rajesh Exports hit by SEBI order: ₹15.15 lakh cr

What triggered the regulatory action

Rajesh Exports has come under the Securities and Exchange Board of India (SEBI) scanner after the regulator flagged alleged financial irregularities running into ₹1,515,000 crore over five financial years. SEBI said it found prima facie evidence that the company inflated its revenue scale, largely through overseas entities that could not be adequately verified during the review. The action matters because Rajesh Exports is widely held, including by large institutions such as Life Insurance Corporation of India (LIC) and a sizeable retail shareholder base. The allegations have also sharpened questions around the quality of disclosures and supporting records for reported transactions.

SEBI’s interim ex-parte order and key allegations

SEBI passed an interim ex-parte order against Rajesh Exports Ltd (REL) and its Chairman and Managing Director, Rajesh Mehta. The order is 109 pages and was passed by Whole-Time Member Kamlesh Chandra Varshney. SEBI cited prima facie findings of financial misrepresentation, fund-routing irregularities, and non-cooperation during an ongoing investigation. In the interim order, SEBI alleged REL misrepresented consolidated revenues aggregating to approximately ₹1,515,000 crore during FY 2020-21 to FY 2024-25. SEBI said this represented about 99.8% of the total consolidated revenue reported for the period.

How revenue recognition is being questioned

A key issue raised by the regulator is the nature of revenue recognition in gold transactions. SEBI contends the company recognized gross gold transaction values rather than only the refining or processing income. The regulator said the company did not provide adequate supporting records, including customer details and invoices, to substantiate the accounting treatment. SEBI also cited a lack of sufficient accounting justification, which it said could have the effect of inflating reported revenues and misleading investors. The interim findings, SEBI noted, are part of an ongoing investigation and are not final.

Role of foreign subsidiaries in reported revenues

SEBI noted that nearly 97-99% of Rajesh Exports’ consolidated revenue came from foreign subsidiaries, with particular reference to Valcambi SA. The order highlighted concerns around the verification of overseas entities used in the revenue chain. SEBI’s interim review and forensic examination, as described in the order, suggested that a very large portion of reported revenues may have been inflated. The regulator characterised the alleged scale of misstatement as “egregious” in the reporting of the interim order.

Timeline: complaint to investigation

The investigation was triggered by a complaint received by SEBI in March 2024 from a shareholder. The complainant alleged potential financial misrepresentation linked to large trade receivables that had remained outstanding for more than two years. The subsequent SEBI inquiry and forensic review led to the interim findings disclosed in early June. SEBI has also sought more records and ordered a fresh forensic audit, as referenced in market reporting around the order.

Stock reaction and investor sentiment

Following SEBI’s order, Rajesh Exports’ shares saw a sharp negative reaction, including a 5% lower-circuit move in some sessions and a lower-circuit opening. The stock opened nearly 5% lower at around ₹103 on June 5, as per the cited market update. The stock has also been under broader pressure, falling around 40% over the past year. The SEBI action further dented sentiment, with reports noting additional market value erosion on the day of the sharp fall.

LIC and retail exposure: what the shareholding data shows

LIC holds a substantial stake in Rajesh Exports, and exchange disclosures for the March 2026 quarter show the holding has remained unchanged since at least September 2023. As per the March quarter shareholding pattern for 2026, LIC held 31,875,887 shares, representing a 10.8% stake. At a cited price of ₹104.65, this stake was valued at ₹333.58 crore. Another cited snapshot put the current value of LIC holdings at ₹347 crore, down from ₹637 crore at the start of 2026 due to the stock decline.

Retail ownership is also significant. Retail investors were reported to own 41,732,856 shares, representing a 14.13% stake, valued at ₹436.73 crore at the referenced price point. The shareholder count mentioned was 194,110 retail investors. Together, LIC and retail investors were described as facing the risk of losing about ₹770 crore in wealth based on the stated values.

Mutual funds stayed away, but institutional scrutiny rose

A separate data point cited that no domestic mutual fund currently owns Rajesh Exports, based on Ace Mutual Fund data referenced in the report. At the same time, the regulatory findings placed focus on institutional backers and the potential implications for portfolios holding legacy positions. Market commentary referenced that institutional research desks at Angel One and financial advisory firm Univest advised investors to avoid bottom-fishing or average-buying into Rajesh Exports following the order.

Key numbers at a glance

Market impact and why the allegations matter

The immediate market impact was visible in sharp price moves in Rajesh Exports and a spillover reaction in LIC, whose shares were reported to have fallen over 1% after the news. For LIC, the issue is not only mark-to-market impact but also the optics of policyholder-backed money being exposed to a multi-year accounting probe at an investee company. The presence of 194,110 retail investors raises investor-protection concerns if disclosures are later found materially misstated. Separately, the interim order adds scrutiny on cross-border revenue chains and documentation standards in commodity-linked businesses where gross transaction values can be large.

Conclusion

SEBI’s interim ex-parte order against Rajesh Exports and promoter Rajesh Mehta has put the company’s reported revenues, documentation, and overseas-entity links under intense scrutiny. With LIC holding a 10.8% stake and retail investors owning 14.13%, the case has quickly become a high-profile test of disclosure quality and regulatory enforcement. The next key milestones will be tied to SEBI’s ongoing investigation, the additional records sought by the regulator, and the fresh forensic audit referenced alongside the interim action.