SEBI Levels Rupees 15 Lakh Crores Allegations Against Rajesh Exports.

Mumbai; June 2026: Once considered to be one of India’s highest-revenue listed companies and a major player in the global gold industry, Rajesh Exports Ltd has come under intense regulatory scrutiny after the Securities and Exchange Board of India (SEBI) accused the company of large-scale financial misrepresentation and governance failures.

In an interim ex-parte order issued on 03rd June, the market regulator alleged that Rajesh Exports and its chairman and managing director, Rajesh Mehta, overstated revenues, engaged in questionable fund-routing practices and failed to adequately cooperate with an ongoing investigation.

SEBI has acted on the basis of evidence and findings gathered during its own investigation without waiting for the company’s response before imposing interim restrictions. Such action by way of an ex-parte interim order is relatively uncommon and is generally reserved for cases where the regulator believes immediate intervention is necessary to protect investors and preserve the integrity of the investigation.

The order also brings the company’s auditors into focus. SEBI has referred the matter to the National Financial Reporting Authority (NFRA) and noted concerns relating to the alleged non-availability of audit working papers and records linked to overseas subsidiaries. The statutory auditors identified in the order are Bengaluru-based BSD & Co and P V Ramana Reddy & Co.

Another aspect attracting attention is the company’s borrowings. While annual reports indicate debt of roughly Rs 1,000 crore, questions remain regarding the lenders involved, the nature of the security backing these facilities, and the financial information on which the credit assessments were based. The issue is likely to come under greater scrutiny as the investigation progresses.

The company has denied the allegations. Speaking after the order was issued, Mehta told media reporters that the findings were incorrect and that the company was examining the order before submitting a detailed response. At the centre of SEBI’s case is an allegation that Rajesh Exports misrepresented approximately Rs 15.15 lakh crore of consolidated revenue between FY21 and FY25, accounting for nearly all of the turnover reported during the period.

The regulator has questioned the manner in which revenues were recognised, particularly in relation to the company’s overseas subsidiaries, including Swiss precious metals refinery Valcambi SA, which Rajesh Exports acquired in 2015.

According to the SEBI order, between 97% and 99% of the group’s reported consolidated revenue originated from foreign subsidiaries and step-down subsidiaries. However, the regulator said the revenues reflected in the audited standalone financial statements of those entities appeared substantially lower than the figures reported at the consolidated level. The investigation has raised concerns over whether the company recorded the full value of gold transactions as revenue instead of recognising only the fees, margins or processing income generated from those activities.

In commodity-processing businesses, accounting standards require companies to determine whether they are acting as principals in a transaction or merely providing a service. Where a company earns only a commission, fee or refining margin, recognising the entire value of the underlying commodity can significantly inflate reported turnover without a corresponding impact on profitability or cash generation.

SEBI has also alleged that Rajesh Exports overstated standalone revenues by Rs 12,557 crore during FY21-FY24. The regulator further claimed that certain derivative transactions undertaken by Rajesh Mehta in his personal capacity were recorded in the company’s books as sales and purchases. Exchange fluctuation gains and interest income from investments were also allegedly classified as operational revenue.

The developments have also put the spotlight on Rajesh Exports’ institutional shareholders. Data for the March 2026 quarter shows that Life Insurance Corporation of India (LIC), the country’s largest domestic institutional investor, continues to hold a 10.80 per cent stake in the company. The insurer has not altered its holding since at least September 2023, despite growing concerns around the stock and its prolonged decline.

Foreign institutional ownership, meanwhile, has gradually reduced over the past three years. FII shareholding in Rajesh Exports declined from 17.60% in March 2023 to 14.26% by March 2026. Among the prominent foreign investors currently on the register are Bridge India Fund, which holds 8.46%, and Schwab Fundamental Emerging Markets Equity ETF with a 2.70% stake.

The sharp correction in the share price has significantly eroded the value of these holdings. LIC’s stake, valued at approximately Rs 637 crore at the beginning of 2026, is now worth around Rs 347 crore. Similarly, the value of FII investments has fallen from about Rs 838 crore to Rs 456 crore. Rajesh Exports shares have declined nearly 40% over the past 12 months and opened about 05% lower at Rs 103 on June 05th following SEBI’s interim order.

Another area of concern relates to the movement of funds. The regulator has flagged alleged transfers of company money through the personal bank accounts of Rajesh Mehta and Siddharth Mehta without the disclosures, approvals or related-party transaction procedures typically required under corporate governance norms.

Team Maverick.