Over Rs 300 crore wiped out in two sessions: Inside the Rajesh Exports controversy and LIC's big stake

Shares of Rajesh Exports have plunged nearly 10 per cent over the last two trading sessions, wiping out more than Rs 315 crore in investor wealth, after market regulator SEBI issued an interim order alleging large-scale financial irregularities and revenue overstatement. The stock hit the 5 per cent lower circuit for a second consecutive session on Friday, closing at Rs 98.73 on the NSE, while the company's market capitalisation fell from about Rs 3,230 crore to Rs 2,915 crore in just two days.

Despite the sharp sell-off, the company has rejected the allegations, maintaining that its reported revenues are accurate and that the regulator's conclusions stem from a misunderstanding of its Swiss subsidiary's financials.

LIC stood apart from other domestic institutions

For years, domestic mutual funds largely kept their distance from Rajesh Exports Ltd. Private insurers stayed away too. Yet one institutional investor steadily increased its exposure to the Bengaluru-based company, state-owned Life Insurance Corporation of India.

That investment decision is now under intense scrutiny after the Securities and Exchange Board of India (SEBI) alleged that Rajesh Exports overstated its consolidated revenues by more than Rs 15 lakh crore between FY21 and FY25 and ordered a fresh forensic audit of the company's books.

The regulator has also barred promoter and chief executive officer Rajesh Mehta from buying, selling or dealing in the company's securities pending further proceedings.

The controversy has triggered fresh debate on Dalal Street over institutional due diligence, corporate governance and the risks associated with concentrated bets by large investors.

Shareholding data paints a stark picture of contrasting investor behaviour.

Domestic mutual funds' exposure to Rajesh Exports peaked at just 0.5 per cent in March 2016 before steadily declining to zero. Private sector insurance companies also held no meaningful stake in the company.

LIC, however, moved in the opposite direction.

The insurer increased its holding from 1.99 per cent in March 2016 to 11.22 per cent by March 2022. As of March 31, 2026, LIC owned 10.8 per cent of the company, making it the largest public shareholder.

Foreign portfolio investors (FPIs) remained invested as well, though their holdings moderated over time. FPI ownership stood at 15.87 per cent in March 2016, rose to 17.7 per cent in March 2023 and subsequently declined to 14.2 per cent by March 2026. A significant portion of that stake is held by Bridge India Fund and Schwab Fundamental Emerging Market Equity ETF.

The spotlight on LIC intensified after opposition parties questioned the insurer's exposure to the company following SEBI's interim findings.

What SEBI found

In its 109-page interim order, SEBI alleged that Rajesh Exports inflated consolidated revenues by attributing massive turnover to overseas subsidiaries, particularly Switzerland-based Valcambi SA.

According to the regulator, the subsidiary's audited standalone financial statements reflected only a fraction of the revenues reported in the group's consolidated accounts.

The regulator's findings have raised concerns over the quality of financial disclosures and reporting practices at one of India's best-known gold refining and jewellery exporting companies.

The order also directed a fresh forensic audit to further examine the company's books and transactions.

Company denies allegations

Rajesh Exports has strongly rejected the allegations, describing media reports linking the company to a scam or fraud as "totally incorrect" and based on "speculative inferences".

In a regulatory filing on Friday, the company said SEBI's interim order merely raised suspicions and did not contain any conclusive adverse findings.

"The revenues stated by the company in its financials are correct," Rajesh Exports said.

The company argued that the regulator's conclusions stemmed from a misunderstanding of Valcambi's financials.

According to Rajesh Exports, the large revenues reflected in consolidated accounts primarily originate from Valcambi, which it described as the world's largest and most reputed gold refinery engaged in bullion sales to major banks, central banks and large bullion institutions globally.

The company claimed that SEBI had considered Valcambi's EBITDA instead of its revenue, leading to an incorrect conclusion that nearly 97 per cent of revenue had been overstated.

Rajesh Exports also said it had provided more than 400 GB of data and information to the regulator and was in the process of addressing each concern raised in the interim order through supporting documents and evidence.

"The company is confident that SEBI will appreciate the submissions of the company and clear all the suspicions raised in the interim order," it said.

LIC placement claims rejected

The company also pushed back against speculation surrounding LIC's shareholding.

Rajesh Exports said reports and social media posts regarding any alleged placement of shares to LIC were "totally incorrect, out of place and speculative".

It maintained that it has never raised money through public offerings after its 1995 initial public offering, through which it raised about Rs 10 crore.

"The company has never made any equity placement to any of the domestic institutions," it said.

Rajesh Exports further asserted that it remains debt-free and is not dependent on external financing for its operations.

Stocks react to controversy

The controversy spilled over to the stock market this week.

Rajesh Exports shares ended Friday at Rs 98.73, down 4.99 per cent, extending losses after SEBI's order.

LIC, which owns a 10.8 per cent stake in Rajesh Exports as of March 2026, has also seen its stock come under pressure. Shares of the insurer closed at Rs 400 on the NSE on June 5 and have declined 1.59 per cent over the past five trading sessions.

With SEBI ordering a forensic audit and Rajesh Exports mounting a detailed defence of its accounting practices, investors will now await the next stage of regulatory proceedings, which could prove crucial for both the company and its largest public shareholder.