Shares of Life Insurance Corporation of India fell over 1% after Rajesh Exports witnessed a sharp 5% decline following Sebi's interim order against the company and its promoter, Rajesh Mehta. As per the latest shareholding data, LIC holds a 10.80% stake in the company.
The market regulator alleged extensive financial irregularities, non-cooperation during the investigation and a possible overstatement of the company's reported revenues.
In its 109-page interim order dated June 3, Sebi said findings from its investigation and forensic examination revealed prima facie evidence that nearly 97-99% of the company's reported revenue may have been inflated. The regulator described the alleged discrepancies as "egregious and unheard of."
The matter originated from a shareholder complaint received in March 2024 that flagged concerns over substantial trade receivables reflected in the company's accounts. Following an initial review, Sebi launched a detailed investigation covering the period between April 2020 and March 2024 and appointed BDO India Services as the forensic auditor.
Rajesh Exports, based in Bengaluru, is engaged in gold refining and jewellery manufacturing and is listed on both the NSE and BSE. The company markets gold products in domestic and overseas markets and operates jewellery outlets under the Shubh Jewellers brand.
A key aspect of Sebi's case relates to what it termed repeated non-cooperation by both the company and its promoter. According to the regulator, Rajesh Exports did not provide access to crucial accounting systems, failed to furnish important financial records and withheld complete documentation sought during the investigation.
Sebi said these shortcomings prevented the forensic auditor from independently verifying a significant portion of the company's transactions. It noted that only a limited number of sampled transactions could be fully supported with the required documents.
The regulator also examined the financial reporting of several overseas subsidiaries and step-down subsidiaries, including entities in Singapore and Switzerland. Transactions involving REL Singapore, Global Gold Refineries AG and Swiss precious metals refiner Valcambi came under scrutiny during the review.
Apart from restricting Rajesh Mehta from dealing in the company's securities, Sebi has directed Rajesh Exports to submit all pending information sought by investigators within 30 days. The regulator has also ordered the appointment of a new forensic auditor to undertake a more comprehensive examination of the company's books and transactions.
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