The Securities and Exchange Board of India (SEBI) has barred Rajesh Exports and its promoter-chairman, Rajesh Mehta, from accessing markets.
This regulatory action follows allegations of massive revenue inflation that could undermine the financial credibility of the Bengaluru-based company and affect its institutional backers.
SEBI issued the interim order on June 3, 2024 [4]. The regulator launched the investigation into the company's financial reporting covering the period from fiscal year 2021 to fiscal year 2025 [4].
The probe was prompted by a shareholder complaint and a forensic audit. SEBI said the company misrepresented approximately Rs 15.15 lakh crore [1]. This amount represents a significant portion of the firm's reported earnings.
Reports on the scale of the inflation vary slightly between sources. One report said that 99.8% of subsidiary revenues were misrepresented [2]. Another source said that the company inflated between 97% and 99% of its reported revenue [3].
Rajesh Exports is backed by Canara Bank and held by the Life Insurance Corporation of India (LIC). The crackdown has already impacted the market, with LIC shares falling one% following the news of the revenue mismatch.
The interim order prevents the company and Mehta from trading in the securities market while the investigation continues. SEBI is examining how the reported figures were inflated and whether the company intentionally misled investors and regulators regarding its actual financial health.
“SEBI said the company misrepresented approximately Rs 15.15 lakh crore.”
The scale of the alleged fraud—potentially encompassing nearly all reported revenue over a five-year period—suggests a systemic failure in corporate governance at Rajesh Exports. Because the company is backed by major entities like Canara Bank and LIC, the fallout may extend beyond the firm itself, potentially triggering wider audits of institutional lending and investment practices in the Indian gold and exports sector.
