Rajesh Exports Faces SEBI Action Over Rs 15 Lakh Crore Fraud – Why Are LIC Shares Falling?

SEBI’s action against Rajesh Exports has put LIC’s 10.8% stake in the spotlight. Shares of Life Insurance Corporation of India (LIC) fell nearly 1% in Thursday’s trade after the market regulator SEBI took action against jewellery maker Rajesh Exports and its promoter, Rajesh Mehta, for alleged financial irregularities worth Rs 15.15 lakh crore between FY21 and FY25. The development has renewed the focus on LIC’s exposure to the company, where the state-owned insurer continues to be one of the major shareholders.

SEBI in its interim order has barred Rajesh Exports and its promoter from the securities market till further orders. The order alleges that the company is involved in a large-scale case of misstatement of revenues and syphoning of funds and has been found non-cooperative in the ongoing investigation. LIC shares have been weak as investors are wary of the situation even as the insurer is not under investigation by the regulator.

What is the connection between Rajesh Exports and LIC?

LIC is the biggest institutional holder in Rajesh Exports with 10.80% stake. The shareholding data for March 2026 shows LIC has been holding these shares for two years and no bulk buy/sell transactions in Rajesh Exports have been seen till now.

The downtrend in Rajesh Exports’ shares in the past one year has led to a decline in the value of LIC’s holding. Estimates put LIC’s stake at close to Rs 347 crore, down from Rs 637 crore at the start of 2026.

What did SEBI find in Rajesh Exports’ Investigation?

SEBI issued an ex-parte interim order on Friday, stating that Rajesh Exports could have inflated its revenue by Rs 15.15 lakh crore over 2021-2025. According to SEBI, this Rs 15.15 lakh crore accounts for the major part of the company’s consolidated revenues over the 5 years.

Most of the misinformation found by the regulator has been attributed to its Switzerland-based subsidiary Valcambi SA, which contributes 97-99% of the group’s consolidated revenue. However, SEBI also points out that the stand-alone audited financial statements of Valcambi reflect much lower revenue compared to what is presented in the group statements.

SEBI has alleged that Rajesh Exports recognised gross gold transaction values as revenue without providing sufficient supporting documentation, customer records, invoices or accounting explanations. The matter has also been referred to the National Financial Reporting Authority (NFRA) for further examination of the auditors involved.

Misappropriation of funds was levelled against the company

In addition to revenue-related irregularities, SEBI has also accused Rajesh Exports of channelling an amount of around Rs 338.90 crore into accounts which are held by its promoter Rajesh Mehta without due authorisation or disclosure.

There have been entries regarding transactions by Affluence Shares and Stocks Pvt. Ltd as well. As the books show, sales and purchases amounting to over Rs 11,400 crore were carried out with the firm; however, Affluence denied doing any such transactions. It is suspected that these were put to book for the sake of inflated sales.

Loan extensions to the company also raise concerns over Canara Bank as well

This regulatory action has also drawn the attention of the nation towards Canara Bank, which had extended a loan to the company. After it declared its account as stressed when the company defaulted on payments, the outstanding amount to Canara Bank was approximately Rs 509 crore.

Earlier this year, Canara Bank initiated a process to sell the stressed loan through an auction mechanism. However, the sale process was later withdrawn without any public explanation.

LIC’s connection to Canara Bank has also attracted attention, as the insurer owns around 5.85% of the public sector lender.

Foreign investors have been cutting exposure

For the past 3 years, Foreign Institutional Investors (FIIs) have been bringing down their stake in Rajesh Exports. The FII holding in March 2023 was 17.6%; in March 2026, the FII holding in the company decreased to 14.3%. The major foreign investors are the Bridge India Fund, which has 8.46%, and the Schwab Fundamental Emerging Markets Equity ETF, which has 2.70%.

Rajesh Exports shares extend losses

Rajesh Exports shares fell about 5% in early trade following SEBI’s order, extending their prolonged decline. In the last 6 months, the stock has fallen around 45%, and in the last year also, it has fallen around 40%.

SEBI has said the investigation is in progress and the company and its promoter will be given the opportunity to defend themselves before any regulatory action is taken. Depending on the outcome, the case could lead to monetary penalties, disgorgement of gains, and longer-term market restrictions.

(Disclaimer: This article is for informational purposes only and should not be considered investment advice. The views, opinions, and recommendations expressed herein are those of the respective experts. Readers are advised to consult a qualified financial advisor before making any investment decisions.)

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