SEBI has barred Rajesh Exports and its chairman, Rajesh Mehta, from the securities market over an alleged ₹15.15 lakh crore revenue misrepresentation between FY21 and FY25. The interim order flags significant fund diversion and financial misstatements, leading to a 54% share price crash and stressing major institutional investors like LIC.
The Securities and Exchange Board of India (SEBI) has issued a landmark 109-page interim ex-parte order against Rajesh Exports Limited and its Executive Chairman, Rajesh Mehta, following allegations of a staggering ₹15.15 lakh crore (approximately $180 billion) revenue misrepresentation. The order, issued on June 3, 2026, by Whole Time Member Kamlesh Chandra Varshney, bars the gold refiner and its promoter from the securities market pending a full investigation into what could be India’s most significant corporate governance failure.
The development follows an intense probe into the company’s financial reporting between FY21 and FY25. SEBI’s investigation suggests that nearly 99.8% of the company's reported consolidated revenue during this period was misrepresented through a complex web of overseas subsidiaries and shell transactions. This news has sent shockwaves through the Indian capital markets, leading to consecutive days of lower circuits for the company's stock and leaving institutional investors like LIC facing substantial valuation erosion.
SEBI Alleges Multi-Layered Revenue Inflation via Foreign Units
The crux of SEBI's charge lies in the discrepancy between the consolidated revenues reported by the Indian parent company and the actual financial standing of its overseas subsidiaries. According to the interim order, 97% to 99% of Rajesh Exports' consolidated revenue originated from foreign units, primarily its Switzerland-based refining giant, Valcambi SA.
However, when SEBI-appointed auditors from BDO verified Valcambi’s audited financials, the numbers reportedly told a different story. While the group claimed consolidated revenues running into several lakh crore, the operating units showed significantly lower figures. The regulator also flagged non-genuine transactions worth ₹11,487 crore in sales and ₹11,488 crore in purchases involving Affluence Shares and Stocks Pvt. Ltd., describing them as a pattern of "questionable accounting."
Impact on Shareholders and Institutional Exposure
The regulatory crackdown has had an immediate and severe impact on market capitalization. Rajesh Exports' share price plummeted to a 5% lower circuit of ₹98.73 by June 5, 2026, marking a 54% decline from its 52-week high. SEBI estimates that the alleged financial irregularities have resulted in the erosion of approximately ₹12,726 crore in shareholder wealth.
A significant point of concern for the broader financial sector is the exposure of the Life Insurance Corporation of India (LIC), which holds a 10.80% stake in the company. Additionally, state-run lender Canara Bank recently classified its ₹509 crore exposure to the company as stressed following repayment defaults, moving to auction the debt to recover dues.
Corporate Governance and Auditor Oversight Under Scrutiny
SEBI’s findings have brought the role of statutory auditors into sharp focus. The regulator has referred the matter to the National Financial Reporting Authority (NFRA) to examine the conduct of the auditors who signed off on the financial statements for five consecutive years.
The investigation revealed that Rajesh Exports allegedly failed to cooperate with auditors, withholding critical customer and vendor records. Auditors noted that the Indian parent’s standalone business was effectively marginal—accounting for just 1.2% of the group’s claimed total—while the bulk of "scale" resided in subsidiaries that could not provide documentation to support their purported multi-lakh-crore turnover.
Official Sources Section
The information in this report is based on the following official records and regulatory disclosures:
Quote Section
"According to officials at SEBI, the interim order was necessary to protect market integrity and investor interest given the unprecedented scale of the prima facie misrepresentation found during the preliminary investigation."
"Organizers stated that the company and its promoter, Rajesh Mehta, have been given an opportunity to challenge the findings before a final determination is made, though the current restrictions on market access remain in full force."
Why It Matters
This case highlights a critical vulnerability in how Indian listed companies report figures from overseas subsidiaries that fall outside the direct jurisdiction of local auditors. For investors, it serves as a stark reminder of the "red flags" often ignored: consistently low net profit margins (reported at 0.01% for a company of this size) and a massive mismatch between standalone and consolidated revenue. The outcome of this probe will likely dictate new, stricter audit standards for Indian firms with significant global operations.
Key Facts at a Glance
Allegation: Prima facie misrepresentation of ₹15.15 lakh crore in consolidated revenue between FY21 and FY25.
Scope: Approximately 99.8% of the company's reported consolidated subsidiary revenues are under investigation.
Regulatory Action: Rajesh Exports and CMD Rajesh Mehta are barred from buying, selling, or dealing in securities until further notice.
Wealth Erosion: Estimated loss of ₹12,726 crore in shareholder value; LIC maintains a 10.80% stake in the troubled firm.
Banking Default: Canara Bank has classified its ₹509 crore exposure as stressed and initiated an open auction for the debt.
FAQ Section
Is the SEBI order against Rajesh Exports final?
No, it is an interim ex-parte order based on prima facie findings. The company and Rajesh Mehta have the right to respond and challenge the allegations at a hearing before SEBI or the Securities Appellate Tribunal (SAT).
Why did the share price hit the lower circuit?
The share price hit the 5% lower circuit because the SEBI allegations, if upheld, would require a total restatement of historical accounts, making existing valuation metrics unreliable. There were no buyers at current levels following the news.
What is the role of Valcambi SA in this investigation?
Valcambi SA is the Switzerland-based refining subsidiary of Rajesh Exports. SEBI alleges that while the group attributed massive revenues to its overseas units, Valcambi's actual audited financials were a mere fraction of the figures reported in the group's consolidated statements.
How does this affect LIC policyholders?
Since LIC is a major shareholder (10.80%), the erosion in Rajesh Exports' stock price directly impacts LIC’s investment portfolio valuation, which in turn can affect the surplus available for policyholder bonuses over the long term.
Source: Securities and Exchange Board of India (SEBI), National Stock Exchange (NSE), Canara Bank Official Disclosures.
