The Centre will take a call on removing Rajesh Exports Ltd from the ₹18,100 crore production-linked incentive scheme for advanced chemistry cells later this week, according to two officials close to the development. A meeting will be chaired by Union heavy industries minister H.D. Kumaraswamy on the issue in the latter half of this week, likely Thursday or Friday, said one of the officials on condition of anonymity. The minister was attending a Shanghai Cooperation Organisation meeting of industry ministers in Kyrgyzstan when, on 3 June, India's markets regulator passed an interim order against the Bengaluru-based gold and diamond jewellery company, alleging financial misrepresentation to the tune of ₹15 trillion. Under the 2021 scheme's request for proposal to set up battery capacity, there is a clause that allows the ministry to disqualify a company. The RFP states that if any misrepresentation of facts was found during bidding, the bidder would forfeit the bid security and the performance security as damages to the government, and the bidder would also not be allowed to participate in any government tenders for two years from the date the government discovered the misrepresentation. The RFP required the bidder to have a net worth of ₹225 crore per GWh of capacity that it is bidding for.
Rajesh Exports shares plunged another 5% to hit the lower circuit at ₹98.73 on NSE on Friday, marking the second consecutive session of decline. According to The Hindu BusinessLine, this marks a steep cumulative decline across consecutive trading sessions following an interim order issued by SEBI. The stock had already fallen 5% to hit the lower circuit limit on Thursday (June 4, 2026) as well. The sharp decline reflects investor concerns over the serious allegations made against the precious metals exporter, with the stock now locked below ₹100 despite the company's clarification efforts. The shares have now fallen 16% in one week, 17% in one month, 21% in three months, and 50% in the last 1 year.
LIC's investment in Rajesh Exports has come under intense scrutiny after SEBI's interim order, with the insurer remaining the firm's largest public shareholder despite limited participation from other domestic institutions. Shareholding data reveals a stark contrast in investor behavior, with domestic mutual funds' exposure peaking at just 0.5% in March 2016 before steadily declining to zero, while LIC increased its holding from 1.99% in March 2016 to 11.22% by March 2022, and currently owns 10.8% as of March 2026. Mint analysis shows that LIC voted against 17 of the 23 shareholder resolutions between December 2021 and December 2026, with the state-run insurer first raising concerns over the company's accounting practices at the shareholder meeting in December 2021, when it opposed the adoption of financial statements citing 'lack of transparency' and 'wrong classification of interest income.' The controversy has triggered fresh debate on Dalal Street over institutional due diligence, corporate governance and the risks associated with concentrated bets by large investors.
Market regulator Sebi issued an interim order against the company and its promoter over alleged large-scale financial irregularities, with the latest developments showing allegations of fund diversion, opaque related-party transactions, and disclosure failures involving two entities linked to the company's lithium-ion cell business: Elest Pvt Ltd and ACC Energy Storage Pvt Ltd. As reported by The Hindu BusinessLine, the regulatory crackdown alleges a massive financial misrepresentation charge of ₹15.15 lakh crore, with the regulator's investigation and forensic review finding prima facie evidence that 97-99% of the company's reported revenue may have been inflated. In a 109-page interim order dated June 3, 2026, SEBI alleged that the company overstated and misrepresented its operational scale and financial performance between FY21 and FY25, with around ₹15.15 trillion, or 99.8% of revenue attributed to subsidiaries, allegedly being misrepresented. SEBI Whole Time Member Kamlesh Chandra Varshney said REL had prima facie misrepresented about ₹15,15,385 crore of revenues attributed to subsidiaries during FY21-FY25, thereby portraying an inflated and misleading picture of its operational scale, consolidated financial position and financial health before investors and the securities market.
Rajesh Exports issued a detailed clarification on Friday following SEBI's interim order, strongly rejecting all speculative inferences regarding any 'scam' or 'fraud' allegations. As reported by The Hindu BusinessLine, Executive Chairman Rajesh Mehta outright rejected media reports and social media postings regarding scams, inflated revenues, or share placements to LIC, branding them as entirely incorrect and out of place. The company maintains that Rajesh Exports is a totally debt-free company and is not dependent on external financing for any of its operations, explicitly stating that it has never raised any money from public offerings except for its initial public issue, which raised a modest ₹10 crore from the public way back in the year 1995. The company clarifies that it has never made any equity placement to any domestic institutions, nor has it ever indulged in any misreporting, asserting that all filings, financial numbers, and revenues are true and genuine. Addressing the core regulatory allegations, the company reiterates that the SEBI directive is merely an interim order which has only raised suspicions on certain aspects, emphasizing that there are no conclusive adverse findings on any company matters. The company points out that the major point being misinterpreted by observers concerns the revenues of the company, a misunderstanding it calls totally misplaced, with huge revenues reported in consolidated financials primarily derived from its subsidiary, Valcambi, which is engaged in the refining and sale of gold bullion to major banks, central banks, and other large bullion entities across the world. The company highlights that Valcambi is globally accepted as the world's largest, finest, and most reputable gold refinery.
According to PTI, Sebi has barred Rajesh Exports' promoter and CEO Rajesh Mehta from buying, selling or dealing in the company's securities until further proceedings are completed, with the regulator also directing the company to make true and fair disclosures of their financial statements, related party transactions and other disclosures under the Listing Obligations and Disclosure Requirements (LODR) regulations. This action came after a shareholder complaint received in March 2024, which triggered the regulatory investigation into the company's financial practices. SEBI's order highlights several obstacles encountered during the forensic audit, with the regulator noting that Rajesh Exports failed to provide critical customer and vendor records, while financial statements of key subsidiaries were allegedly not disclosed. The controversy has spilled over to the stock market, with LIC shares closing at ₹400 on NSE on June 5 and declining 1.59% over the past five trading sessions. The latest reports indicate that Sebi also flagged non-cooperation by the company's statutory auditors, stating that despite assurances during depositions, audit working papers were not provided. To resolve the situation, Rajesh Exports is currently in the process of mitigating each one of the concerns raised in the SEBI interim order by providing detailed explanations, documents, and solid evidence, with the management expressing complete confidence that SEBI will appreciate these formal submissions and clear all the suspicions raised in the interim order.
Over 194,000 retail investors with investments of under ₹2 lakh held 14.13% of the company's share capital as of March 31, 2026, according to Mint analysis, representing a significant increase from fewer than 40,000 such investors owning just 1.6% five years ago. Mehta and family owned 54.5% as of end March 2026, with most resolutions requiring approval from half of shareholders who voted, meaning none of the 26 resolutions were rejected despite opposition from institutional investors. LIC's voting trail shows it voted against 17 of 23 shareholder resolutions between December 2021 and December 2026, with the insurer first raising concerns over the company's accounting practices at the shareholder meeting in December 2021, when it opposed the adoption of financial statements citing 'lack of transparency' and 'wrong classification of interest income.' Corporate governance expert Sharmila Gopinath noted that while LIC flagged concerns as early as five years ago, the insurer could have done more by engaging with management and writing to SEBI. Norway's sovereign wealth fund Norges, which owned 0.51% and exited the company in 2025, had rejected Rajesh Exports' proposal to reappoint Rajesh Mehta as chairperson in 2023, stating that board decisions vulnerable to conflicts of interest should have additional safeguards. The Schwab Fundamental Emerging Markets Equity ETF (FNDE), which owns 2.70%, opposed Mehta's re-election in December 2023 and objected to the appointment of auditors in September 2024, while Legal & General Investment Management (LGIM) rejected all eight shareholder resolutions put forth by Rajesh Exports between 2021 and 2025.
