Shares of Bengaluru-based jewellery manufacturer Rajesh Exports Ltd.(REL) plummeted on Thursday morning, hitting a 5% lower circuit on the BSE and NSE. 

The massive sell-off was triggered by a stringent 109-page interim ex parte order issued by the Securities and Exchange Board of India (SEBI) on the evening of June 3, 2026.

The market regulator restrained Chairman and Managing Director (CMD) Rajesh Mehta from buying, selling, or dealing in securities of  Rajesh  Exports  Limited, either directly or indirectly, in any manner whatsoever, until further orders, citing “egregious and unheard of” financial irregularities, including a prima facie revenue inflation of roughly ₹15.15 lakh crore.

The Core Allegation: ₹15.15 Lakh Crore Discrepancy

According to the interim order passed by SEBI Whole Time Member Kamlesh Chandra Varshney, Rajesh Exports is accused of misrepresenting its consolidated revenues by approximately ₹15.15 lakh crore between FY2020-21 and FY2024-25. This staggering figure accounts for nearly 99.8% of the company’s total reported consolidated revenue during that five-year period.

SEBI noted that 97% to 99% of the company’s consolidated revenue purportedly originated from its overseas subsidiaries and step-down subsidiaries (such as Swiss precious metals refiner Valcambi SA and REL Singapore). However, the company consistently failed to furnish complete financial statements for these entities.

Strikingly, SEBI’s initial probe found that the actual standalone revenues of Valcambi represented less than 0.5% of the consolidated revenues reported by the group, exposing a massive potential overstatement.

At the standalone level, SEBI alleged a revenue misstatement of ₹12,557 crore between FY21 and FY24.

Fund Routing, Fictitious Trades, and Accounting Malpractices

Beyond the revenue discrepancies, the regulator’s investigation uncovered systemic failures in corporate governance and accounting:

  • Personal Trades Booked as Corporate Revenue: SEBI alleges that derivative transactions undertaken by CMD Rajesh Mehta in his personal capacity via the stockbroker Affluence Shares and Stocks—amounting to ₹11,487 crore in sales and ₹11,488 crore in purchases—were falsely recorded in the company’s books as corporate sales and purchases.
  • Fund Diversion: The order highlights the routine routing of substantial corporate funds through the personal bank accounts of promoters Rajesh Mehta and Siddharth Mehta without the requisite board or audit committee approvals.
  • Accounting Misclassifications: The company allegedly made unverifiable claims regarding “investments in African gold mines.” It is also accused of incorrectly classifying foreign exchange fluctuation gains (₹867 crore) and interest income from mutual funds and fixed deposits as core operational revenue.

Non-Cooperation with Forensic Auditors

The regulatory probe, covering the period from April 2020 to March 2024, was originally triggered by a shareholder complaint in March 2024 regarding long-outstanding trade receivables. SEBI subsequently appointed an Investigating Authority and BDO India Services Pvt Ltd as the forensic auditor.

However, SEBI stated that the company and its CMD actively hampered the investigation. Rajesh Exports denied the BDO auditors access to its Enterprise Resource Planning (ERP) accounting systems and withheld critical transaction-level documents. SEBI noted that this deliberate non-cooperation created a severe information asymmetry for investors, leading to the necessity of immediate regulatory intervention.

Market Impact and Ripple Effect on LIC 

Following the regulatory crackdown, Rajesh Exports’ share price was locked at the 5% lower circuit (trading at ₹104.65 on the BSE and ₹103.92 on the NSE) shortly after the market opened on June 4. The stock has been heavily battered by investors, continuing a severe downtrend that has wiped out a vast majority of its value since its 2023 highs.

The ripple effect of the crash was also felt by the Life Insurance Corporation of India (LIC). According to the latest available shareholding data as of March 2026, LIC is a significant stakeholder in REL, holding a 10.80% stake. Consequently, LIC’s shares slipped approximately 1% in Thursday morning’s trade session.

A snapshot of the Rajesh Exports’ shareholding pattern reveals that promoters maintain a 54.60% holding, Foreign Institutional Investors (FIIs) hold roughly 14.30%, and domestic institutional and retail investors make up the rest.

Regulatory Action and Next Steps

In addition to barring Rajesh Mehta from dealing in securities for three years, SEBI has directed Rajesh Exports to submit all pending information to the investigators within 30 days. To ensure complete transparency moving forward, SEBI has ordered the appointment of a new forensic auditor to conduct a comprehensive, unimpeded examination of the company’s books, subsidiaries, and transactions.