LIC, which held a 10.8 per cent stake in the gold refiner and exporter as of March 2026, remains the company’s largest public shareholder. The state-owned insurer's continued exposure to the company despite the stock’s prolonged decline and mounting regulatory concerns has drawn criticism from governance experts and investors.
An email sent to LIC seeking comment remained unanswered until press time.
Shares of Rajesh Exports hit the 5 per cent lower circuit on Thursday to close at ₹105. The company is now valued at about ₹3,090 crore, with its market capitalisation down more than 40 per cent this year — and almost 90 per cent from the peak in February 2023.
The developments follow Sebi’s 109-page interim order alleging misreporting in Rajesh Exports’ financial statements amounting to ₹15.15 trillion, or nearly 99 per cent of its reported revenue. The regulator described the alleged misrepresentation as "unheard of" and barred the company’s executive chairman, Rajesh Mehta, from trading in the firm’s securities pending further investigation.
In a bid to defend Rajesh Exports against the allegations, Promoter and Executive Chairman Rajesh Mehta on Thursday told Business Standard: “We have shared over 400 GB of data and information with the market regulator. We have already provided most of the details, but there seems to be a communication gap and confusion. We will be clarifying the matter with Sebi and also again sending all the required documents, which we are confident should clarify the matter.”
Proxy advisory firms said the episode raises broader questions about the investment processes followed by institutions entrusted with public savings. “LIC owes a huge responsibility to its policyholders. It should undertake rigorous forensic accounting and due diligence before making investments so that companies with fictitious revenues can be identified at an early stage,” said Shriram Subramanian, founder and managing director of InGovern Research Services.
Experts said institutional investors should reassess holdings when credible evidence of accounting irregularities emerges rather than waiting for regulatory intervention. Apart from LIC, Mauritius-based Bridge India Fund held an 8.46 per cent stake in Rajesh Exports as of March 2026.
"In the case of public financial institutions, which manage public money and typically have robust investment committees and oversight mechanisms, one can reasonably expect heightened vigilance over large investments, especially where they receive information under investment agreements or through periodic investor interactions," said Prem Rajani, managing partner at Rajani Associates.
Rajesh Exports, however, argued there would be little incentive for a listed company to inflate revenue while keeping profits unchanged, as doing so would compress margins. The company said it would continue cooperating with Sebi and provide additional information to resolve the matter.
Questions over the company's accounts first surfaced in 2023 when the National Stock Exchange sought details on certain investments and cash flows. Shareholder complaints were subsequently filed with Sebi in 2024.
According to Sebi, company funds were routed and layered through personal accounts and related entities without adequate disclosures or supporting documentation. The regulator also alleged that funds were transferred to Mehta’s personal account for derivatives trading and later recorded in the company's books as sales and purchase transactions.
Sebi has separately referred the matter to the National Financial Reporting Authority (NFRA) for an examination of the company's statutory auditors.
“We can expect an immediate handover to the Serious Fraud Investigation Office (SFIO) to unravel the complex web of cross-border shell structures and initiate criminal prosecution under the Companies Act for corporate fraud,” said Ankita Singh, founder of Sarvaank Associates.
"Concurrently, because the order flags the unauthorised diversion of hundreds of crores into promoter-linked accounts, the Enforcement Directorate is bound to step in under the Prevention of Money-Laundering Act to trace the proceeds of crime and provisionally attach domestic and international assets. This no longer appears to be merely a regulatory compliance issue; it is rapidly evolving into a major economic-offences investigation," she added.
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