Shares of Rajesh Exports Ltd (REL) hit the 5% lower circuit on Thursday after market regulator Securities and Exchange Board of India (Sebi) passed an interim order against the company and its Chairman and Managing Director Rajesh Mehta, alleging large-scale financial misrepresentation, fund-routing irregularities and non-cooperation during an ongoing investigation.
The stock opened at its lower circuit limit of Rs 103.92 on the NSE on June 5, down 4.99% from the previous close of Rs 109.38.
Sebi Bars Rajesh Mehta From Trading in Company Shares
In a 109-page interim order, Sebi restrained Rajesh Mehta from buying, selling or otherwise dealing in Rajesh Exports securities until further orders.
The regulator also directed the company to make true and fair disclosures regarding its financial statements,
related-party transactions and other disclosures required under the Listing Obligations and Disclosure Requirements (LODR) Regulations.
According to Sebi, its investigation revealed prima facie evidence of misrepresentation in financial statements and instances of routing and layering of funds through personal accounts and related entities without adequate disclosures or supporting documentation.
The regulator said the company was repeatedly asked to provide financial records, explanations regarding fund flows and supporting documents, but failed to furnish satisfactory responses.
Sebi Alleges Revenue Inflation of Up to 99%
One of the most serious observations in Sebi’s order relates to Rajesh Exports’ reported revenues.
The regulator noted that nearly 97-99% of the company’s consolidated revenue originated from foreign subsidiaries, particularly Valcambi SA. However, audited standalone financial statements of these subsidiaries reflected only a fraction of the revenues reported at the consolidated level.
Sebi alleged that Rajesh Exports may have recognised the gross value of gold transactions instead of accounting only for refining or processing income, potentially inflating its revenue figures. The regulator estimated that consolidated revenues aggregating to about Rs 15.15 lakh crore may have been misrepresented during the investigation period.
The watchdog has also referred the matter to the National Financial Reporting Authority (NFRA) to examine the conduct of the company’s statutory auditors.
LIC Remains Largest Institutional Investor
Despite the sharp decline in the stock and ongoing regulatory scrutiny, Life Insurance Corporation of India (LIC) continues to hold a significant stake in Rajesh Exports.
Shareholding data for the March 2026 quarter shows LIC owned 10.80% of the company. The stake has remained unchanged since at least September 2023, indicating that the insurer has neither increased nor reduced its holding during this period.
At the current market price, LIC’s holding is valued at around Rs 347 crore, sharply lower than approximately Rs 637 crore at the beginning of 2026 due to the stock’s decline.
Foreign Investors Cut Exposure
Foreign institutional investors (FIIs) have gradually reduced their exposure to Rajesh Exports over the last three years.
Total FII ownership declined from 17.60% in March 2023 to 14.26% in March 2026.
Among the key foreign investors, Bridge India Fund holds 8.46%, while Schwab Fundamental Emerging Markets Equity ETF owns 2.70%.
The combined value of FII holdings has also fallen significantly. At current prices, foreign investors’ stake is worth about Rs 456 crore compared with roughly Rs 838 crore at the start of 2026.
Auditors Also Face Scrutiny
Sebi’s order also raised concerns regarding the conduct of the company’s auditors.
According to the regulator, the auditors initially agreed to provide audit working papers during depositions but subsequently failed to submit them. Sebi stated that such sustained non-cooperation could indicate an attempt to suppress material information and obstruct regulatory inquiry.
The regulator has ordered the appointment of a new forensic auditor after observing inadequate cooperation during the earlier forensic audit process.
Stock Down 40% in One Year
Rajesh Exports shares have been under pressure for an extended period, declining around 40% over the last one year.
The latest Sebi action has further dented investor sentiment, triggering a lower-circuit opening and wiping out additional market value. The investigation stems from a complaint received by Sebi in March 2024 from a shareholder who alleged potential financial misrepresentation related to large trade receivables that had remained outstanding for more than two years.
The regulator’s investigation covers the period from April 1, 2020, to March 31, 2024.
