SEBI barred Rajesh Exports Limited and promoter-chairman Rajesh Mehta from the securities market following an investigation into alleged financial irregularities, disclosure lapses, related-party transactions, and possible manipulation of financial statements involving an alleged revenue misrepresentation of nearly Rs 15.15 lakh crore.
In one of the most significant corporate governance and securities market enforcement actions in recent years, the Securities and Exchange Board of India (SEBI) issued an interim order on June 3, 2026, restraining Rajesh Exports Limited (REL) and its promoter-chairman Rajesh Mehta from accessing the securities market.
The regulator’s action is based on a detailed investigation into alleged financial irregularities, disclosure failures, related-party transactions, and possible manipulation of financial statements over several years. The case has attracted widespread attention because it involves alleged revenue misrepresentation amounting to approximately Rs 15.15 lakh crore, making it one of the largest accounting-related investigations undertaken by SEBI.
Rajesh Exports Limited
Rajesh Exports Limited, incorporated in 1995, is one of India’s prominent gold refining and jewellery manufacturing companies. The company is engaged in refining gold, manufacturing gold products, exporting jewellery and bullion products to various countries, and operating retail jewellery outlets under the brand name “Shubh Jewellers.”
Despite having a market capitalization of approximately Rs 3,210 crore as on June 3, 2026, the company has historically reported annual revenues running into several lakh crores, making it one of the highest revenue-generating listed companies in India. This unusual contrast between its market valuation and reported turnover had long attracted market attention and eventually became one of the factors examined by regulators.
Factual Backgrounds:
The proceedings originated from a shareholder complaint received by SEBI through an email dated March 11, 2024. The complainant raised concerns regarding unusually large trade receivables that had remained outstanding for more than two years. Such long-pending receivables often attract regulatory scrutiny because they may indicate potential issues such as fictitious sales, revenue inflation, round-tripping of transactions, or difficulties in recovering dues from customers. Considering the seriousness of the allegations, SEBI conducted a preliminary examination and found sufficient grounds to initiate a formal investigation.
ALSO READ: Reliance Vs SEBI | Supreme Court Reserves Verdict in Share Trading Manipulation Dispute
On October 23, 2024, SEBI appointed an Investigating Authority to examine possible violations of various securities laws, including the Securities and Exchange Board of India Act, 1992, the Securities Contracts (Regulation) Act, 1956, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. To assist in the investigation, SEBI also appointed BDO India Services Private Limited as a forensic auditor on December 3, 2024.
The Core Issues:
Revenue Discrepancies: At the heart of SEBI’s interim order lies an extraordinary allegation concerning the company’s reported revenues between the financial years 2020-21 and 2024-25.
According to SEBI, between 97 percent and 99 percent of Rajesh Exports’ consolidated revenues during the relevant period were reported as originating from its overseas subsidiaries. Among these entities, Switzerland-based Valcambi SA, a globally known gold refinery acquired by Rajesh Exports, played a crucial role and was considered the backbone of the group’s international operations.
However, during the forensic examination, auditors allegedly discovered substantial inconsistencies between the revenues reported in the consolidated financial statements and the revenues that could be independently verified from the records of subsidiaries, including Valcambi. SEBI has alleged that the cumulative mismatch amounted to an astonishing Rs 15.15 lakh crore over five financial years. The regulator observed that the discrepancy corresponded to nearly the entire consolidated revenue reported by the company during the period under review.
African Investments and Related Transactions: Apart from the alleged revenue discrepancies, SEBI’s investigation has raised concerns regarding a reported investment of approximately Rs 1,035 crore in gold mining assets located in Africa.
The regulator stated that despite repeated requests, the company failed to provide adequate supporting documentation to establish the existence and valuation of these investments. According to the interim order, essential materials such as valuation reports, reconciliation statements, and entity-wise breakups were either unavailable or insufficient for verification.
Transactions involving Affluence Shares and Stocks Private Limited: The regulator has also questioned transactions involving Affluence Shares and Stocks Private Limited. As per SEBI’s findings, Rajesh Exports reported sales worth Rs 11,487 crore and purchases worth Rs 11,488 crore involving the entity. However, during the course of the investigation, Affluence allegedly denied carrying out any such transactions and reportedly informed investigators that Rajesh Exports was never its client and that no agreements existed between the two entities. This contradiction emerged as one of the significant red flags highlighted by SEBI.
Movement of company funds: SEBI alleged that certain company funds were transferred to accounts linked to promoter Rajesh Mehta and were subsequently utilized for personal derivative trading activities. Investigators referred to transactions amounting to Rs 7.4 crore that allegedly moved into Mehta’s personal accounts, with a portion of the funds later being returned to the company.
According to SEBI, these transactions were neither approved by the board nor disclosed to shareholders as related-party transactions. The regulator has additionally alleged that gold derivative trades were executed through Mehta’s personal trading account while corresponding records appeared in the company’s books. These allegations remain subject to further investigation and the company’s response.
ALSO READ: SEBI Bans Arshad Warsi and Wife from Stock Market Over Pump and Dump Scam
Verification of Revenue: The central issue in the SEBI investigation concerns the authenticity and verifiability of the revenues reported by Rajesh Exports and its overseas subsidiaries. According to the interim order, an overwhelming majority of the company’s consolidated revenues were generated through foreign subsidiaries. During the investigation, SEBI and the forensic auditor repeatedly sought documents and records necessary to verify these transactions. However, according to the regulator, substantial information was either not provided at all or was provided only partially.
The inability to independently verify revenues amounting to approximately Rs 15.15 lakh crore became the foundation of SEBI’s allegations. It is important to note that SEBI has not conclusively stated that this amount was siphoned off or stolen. Rather, the regulator’s concern is that revenues of such an enormous magnitude were reported without adequate supporting evidence and therefore could not be independently substantiated during the investigation.
Failure to Provide Critical Information: A major aspect of SEBI’s case relates to what it describes as a lack of cooperation from the company. The interim order contains a detailed annexure listing crucial information and documents that were allegedly not furnished despite repeated requests from the Investigating Authority and the forensic auditor.
Among the information not provided were vendor master data, customer master data, and employee master data. These records are fundamental for verifying the identity and legitimacy of parties involved in business transactions. Without such information, it becomes difficult to establish whether reported sales and purchases actually occurred with genuine counterparties.
The company also allegedly failed to furnish complete journal voucher dumps containing accounting entries posted during the investigation period. Journal entries are often crucial in forensic investigations because they reveal adjustments, corrections, revenue recognition practices, write-offs, and other accounting treatments that may not be apparent from financial statements alone.
SEBI further noted that comprehensive details of transactions involving directors, key managerial personnel, family members of management, related parties, and entities such as Elest Private Limited were not provided. Such information is essential for determining whether company funds were routed through connected entities or whether undisclosed related-party transactions took place.
Non-Availability of ERP Systems and Books of Accounts: One of the most serious concerns highlighted in the interim order is the alleged failure to provide access to the company’s Enterprise Resource Planning (ERP) system and accounting databases. Modern ERP systems contain detailed transaction-level information relating to sales, purchases, inventory, payments, and accounting entries. They serve as the backbone of a company’s financial record-keeping.
The forensic auditor specifically requested access to the ERP system and books of accounts to independently verify transactions. However, according to the order, such access was not provided. The absence of ERP access significantly limited the auditor’s ability to examine the underlying records supporting the company’s reported revenues and expenses. In forensic accounting investigations, denial of ERP access is often considered a serious obstacle because it prevents independent verification of financial data.
Failure to Provide Information on Foreign Subsidiaries Since a substantial portion of Rajesh Exports’ reported revenues allegedly originated from overseas entities, information relating to these subsidiaries assumed critical importance. However, SEBI recorded that detailed financial and operational information relating to foreign subsidiaries was not furnished.
This issue acquires greater significance because listed companies are required under Regulation 46 of the LODR Regulations and Section 136 of the Companies Act, 2013, to make available financial statements of subsidiaries for the benefit of shareholders and investors. The absence of such information prevented regulators and auditors from independently assessing the financial performance of the overseas entities responsible for generating most of the group’s revenues.
The Legal Mandates:
The interim order relies on several provisions of securities laws that empower SEBI to protect investors and maintain market integrity. Among these are Sections 11 and 11B of the SEBI Act, which authorize the regulator to issue directions whenever necessary to safeguard investor interests and ensure the orderly development of the securities market.
SEBI has also invoked Section 11C(3) of the SEBI Act, which requires persons associated with the securities market to furnish information and produce documents relevant to an investigation. The alleged failure to provide records requested by investigators forms a significant component of the regulator’s case.
Further, Section 12A of the SEBI Act prohibits the use of manipulative or deceptive devices, fraudulent schemes, and practices that operate as fraud upon investors. SEBI appears to be examining whether the alleged financial misstatements and disclosure failures fall within the scope of these prohibitions.
The regulator has additionally referred to the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. Regulation 3 prohibits fraudulent schemes, deceptive practices, and conduct intended to defraud investors. Regulation 4 specifically prohibits fraudulent and unfair trade practices in the securities market.
Of particular importance is the explanation to Regulation 4, which states that diversion, misutilization, siphoning of assets, or manipulation of financial statements of a listed company may constitute a fraudulent and unfair trade practice. The regulations also prohibit knowingly publishing false or misleading financial information that may influence investor decisions. SEBI’s allegations concerning unverified revenues and potential misrepresentation of financial performance appear to have been examined within this legal framework.
SEBI has also cited various provisions of the LODR Regulations. Regulation 4 requires listed entities to ensure transparency, accuracy, and completeness in disclosures made to investors and stock exchanges. Companies are expected to prepare financial statements in accordance with applicable accounting standards and refrain from making misleading disclosures.
ALSO READ: Delhi High Court Slams SEBI: ‘Intrinsic’ Investigation Report Must Be Shared With Accused
Regulation 23 requires prior approval of the audit committee for all related-party transactions, while Regulation 33 mandates the submission of accurate financial results to stock exchanges. Regulation 46 requires listed companies to upload financial statements of subsidiaries on their websites. According to SEBI, the facts uncovered during the investigation raise questions regarding compliance with these obligations.
The interim order also references several Indian Accounting Standards (Ind AS). Ind AS 1 requires transparent presentation of financial statements and generally prohibits inappropriate offsetting of assets, liabilities, income, and expenses. Ind AS 32 allows offsetting only in limited circumstances where a legally enforceable right exists and settlement is intended on a net basis.
Ind AS 107 mandates disclosure of offsetting arrangements and financial instruments, while Ind AS 24 requires disclosure of related-party relationships, transactions, and outstanding balances. SEBI appears to be examining whether the company’s accounting practices complied with these standards and whether investors received a true and fair view of its financial position.
Company’s Defence, Investor Concerns and Market Fallout
Rajesh Exports has strongly denied the allegations made by the regulator and emphasized that the order passed by SEBI is merely interim in nature.In its response, the company stated,
“The revenues declared by the company are correct and there is no over stating of revenues.”
The company further asserted,
“There seems to be some type of communication gap and confusion between SEBI and the company. The company is in the process of clarifying all aspects to SEBI by submitting all the required and relevant documents.”
Rajesh Exports also maintained that no final adverse findings had been recorded by the regulator and that it intends to fully cooperate with the ongoing proceedings.
The implications of the investigation extend well beyond the company and its promoters. One of the largest shareholders in Rajesh Exports is the Life Insurance Corporation of India (LIC), which reportedly holds approximately 10.8 percent of the company’s equity. Consequently, any significant erosion in shareholder value potentially impacts millions of policyholders whose funds are invested through LIC. SEBI has estimated that shareholder wealth erosion associated with the alleged misconduct could amount to nearly Rs 12,726 crore.
Commenting on the broader lessons arising from the case, Siddharth Maurya, Founder and Managing Director of Vibhavangal Anukulakara Private Limited, stated:
“Rajesh Exports offers a lesson on the shortfall of certain metrics. Although revenue, brand, and stock data are important and should be included in investment decisions, they should never be the sole components. Allegations of massive revenue fraud, coupled with the SEBI’s regulatory action, and insolvency issues, necessitate a broader analysis of governance, liquidity, the quality of cash, auditor comments, and the level of transparency. Regulatory actions of this nature, and the subsequent erosion of trust, concern the integrity of the reported financials and the company’s governance.”
He further added:
“Retail investors should be inspired by this example to practice the first rule of investment, which is adequate diversification. Retail investors should always be wary of concentrating a significant proportion of their investment capital in the stock of a single company no matter how large and respectable the company is. Investors should be vigilant and monitor the company’s regulatory filings, stock exchange disclosures, and red flags. The goal of investing is to protect capital from risks and losses, and not always to find the best growing companies. In today’s market, healthy governance and solid financial standing are as important as financial performance.”
Meanwhile, the company is also facing pressure from lenders. Canara Bank has reportedly classified its exposure to Rajesh Exports as a stressed asset after repayment defaults. The bank’s outstanding dues are stated to be around ₹509 crore, and steps have reportedly been initiated to auction the stressed exposure. Although separate from SEBI’s investigation, the banking concerns have added to the company’s challenges.
The market reaction has been severe. Following SEBI’s interim order, Rajesh Exports shares hit the 5 percent lower circuit. The stock has already lost more than 80 percent of its value over the last three years and remains significantly below its historical highs.
While SEBI’s findings are presently only prima facie observations and the investigation remains ongoing, the case has already emerged as a major test for India’s corporate governance and disclosure framework. The final outcome could have far-reaching implications not only for Rajesh Exports and its promoters but also for investor confidence in the integrity of corporate financial reporting.
FOLLOW US FOR MORE LEGAL UPDATES ON YOUTUBE