LIC Stayed Invested as Rajesh Exports Crashed. Then SEBI Found Something Bigger

SEBI :  A stock that had already lost nearly 40% of its value is suddenly facing far bigger questions.

Why did LIC continue holding more than 10% of Rajesh Exports while the company struggled in the market?

That question is gaining attention after SEBI issued an interim order against Rajesh Exports and its Chairman and Managing Director, Rajesh Mehta, alleging financial irregularities, revenue misrepresentation and non-cooperation during an ongoing investigation.

The development has placed one of India’s largest institutional investments under the spotlight and triggered fresh concerns among investors.

SEBI’s Findings Have Changed The Conversation

For months, investors were worried about Rajesh Exports’ weak stock performance.

Now the focus has shifted to the company’s reported financial numbers.

SEBI has alleged that Rajesh Exports may have misrepresented consolidated revenues worth nearly ₹15.15 lakh crore between FY21 and FY25. According to the regulator, a large portion of the reported revenue originated from overseas subsidiaries and may not have been adequately supported by underlying records. The regulator has also restrained promoter Rajesh Mehta from dealing in the company’s securities while the investigation continues.

The findings immediately caught the market’s attention because the scale of the alleged discrepancies is unusually large.

For investors, the issue is not simply about a regulatory notice. It is about whether the financial numbers used to evaluate the company accurately reflected its underlying business.

What SEBI Has Ordered Against Rajesh Exports

SEBI has taken immediate action against Rajesh Exports and its Chairman and Managing Director, Rajesh Mehta, after finding prima facie evidence of financial irregularities.

Key Directions by SEBI

• Rajesh Mehta has been barred from dealing in Rajesh Exports securities until further orders.
• SEBI has ordered a detailed investigation into the alleged revenue misrepresentation and fund-routing transactions.
• The company has been directed to fully cooperate with forensic auditors and investigating officials.
• Rajesh Exports must provide financial records, documents, and other information sought by regulators.

Why It Matters

The interim order marks the beginning of a deeper regulatory probe and signals SEBI’s serious concerns over the company’s financial reporting practices. The findings of the investigation could have significant implications for LIC, FIIs, and nearly 1.94 lakh retail investors.

Read More : Why Markets Fell Today: IT Index Slides Nearly 6% Overpowers Bank Rally, Sensex Ends Lower

What the Numbers Reveal About the Rajesh Exports Crisis

The allegations against Rajesh Exports are not limited to accounting discrepancies. The figures highlighted in SEBI’s interim order paint a picture of what could become one of the biggest corporate governance controversies in recent Indian market history. SEBI has alleged large-scale revenue inflation, unauthorized fund movements, and serious compliance failures, leading to significant losses for shareholders and institutional investors.

Revenue Misrepresentation of ₹15.15 Lakh Crore

According to SEBI, Rajesh Exports allegedly misrepresented consolidated revenues worth approximately ₹15.15 lakh crore between FY21 and FY25. The regulator claimed that nearly 99.8% of the reported consolidated revenue may have been inflated through transactions involving overseas entities and subsidiaries, including Swiss refinery Valcambi SA.

₹926 Crore Allegedly Routed Through Unauthorized Transactions

SEBI’s investigation also pointed to approximately ₹926 crore in transactions that were allegedly routed without proper approvals. Reports indicate that a portion of these funds, including around ₹339 crore, was transferred to promoter-linked accounts and used for personal derivatives trading activities. The regulator is continuing its forensic examination of these transactions.

Massive Destruction of Shareholder Wealth

The market fallout has been severe. Rajesh Exports shares have declined nearly 40% over the last year and more than 80% over the last three years, resulting in an estimated ₹12,726 crore erosion of shareholder wealth. Investor confidence has weakened sharply as regulatory scrutiny intensified.

LIC Among the Biggest Institutional Casualties

One of the most closely watched aspects of the case is the exposure of Life Insurance Corporation of India (LIC), which continues to hold a 10.80% stake in Rajesh Exports. The value of LIC’s investment reportedly declined from around ₹637 crore to ₹347 crore, highlighting the impact of the stock’s prolonged decline.

Nearly 2 Lakh Retail Investors Caught in the Fallout

The crisis extends beyond institutional investors. An estimated 1.94 lakh retail shareholders remain invested in the company. Following SEBI’s interim order on June 3, 2026, Rajesh Exports shares hit the 5% lower circuit, falling to around ₹104 and adding to an already steep multi-year decline.

Crisis Snapshot

LIC’s Unchanged Stake Is Now Under Focus

The LIC stake in Rajesh Exports currently stands at 10.80%.

Despite the prolonged decline in the stock, the insurance giant has maintained its holding for several quarters without making any major changes.

That decision now looks increasingly important as regulatory scrutiny intensifies.

The market value of LIC’s investment has fallen sharply alongside the stock price, bringing renewed attention to the insurer’s exposure to the company.

Investors are now asking whether LIC will continue holding its position or reassess its investment once greater clarity emerges.

Foreign Investors Were Already Turning Cautious

Interestingly, foreign institutional investors appear to have become more cautious long before SEBI’s latest action.

While institutional investors still hold a significant stake in Rajesh Exports, overall foreign ownership has gradually declined over the last few years.

The trend suggests that some investors had already started reducing exposure as concerns around governance, disclosures and business visibility increased.

Now, SEBI’s observations have added another layer of uncertainty to the investment case.

The Stock’s Performance Told Part Of The Story

Rajesh Exports shares have remained under pressure for much of the past year.

The stock has lost around 40% of its value, reflecting weakening investor confidence and growing concerns about transparency.

After SEBI’s interim order became public, the shares hit the 5% lower circuit as traders reacted to the regulator’s findings and the uncertainty surrounding the company’s financial reporting.

Markets generally dislike unanswered questions, especially when they involve reported revenues and financial disclosures.

That is why the latest developments have attracted such strong attention.

Why This Matters Beyond Rajesh Exports

The story is no longer just about one company’s share price.

It has become a broader discussion about corporate governance, disclosure standards and investor protection.

When a company faces allegations involving reported revenues, institutional investors, auditors, regulators and retail shareholders all become part of the conversation.

The case is particularly significant because LIC remains one of the largest shareholders in the company.

As a result, every development is likely to be closely watched by the market.

What Investors Should Watch Next

Several developments could influence the next phase of the story:

SEBI’s Final Findings

The regulator’s investigation is still ongoing, and the final outcome could have a major impact on investor sentiment.

Company’s Response

Investors will closely monitor whether Rajesh Exports provides additional clarification regarding the allegations and its accounting practices.

Institutional Investor Activity

Any change in LIC’s stake or further reduction in foreign investor holdings could become an important signal for the market.

Further Regulatory Action

SEBI has already taken interim measures, and additional developments may emerge as the investigation progresses.

Conclusion

Rajesh Exports was already under pressure because of its falling share price.

Now, SEBI’s findings have shifted the focus toward much larger questions surrounding financial reporting and corporate governance.

With LIC continuing to hold 10.80% of the company and institutional investors closely monitoring developments, the story is far from over.

Until greater clarity emerges, Rajesh Exports is likely to remain on the radar of regulators, traders and long-term investors alike.