Rajesh Exports shares plunged 5 per cent and locked in the lower circuit at ₹104.65 on Thursday, 4 June, after the Securities and Exchange Board of India (SEBI) issued an interim order against the company and its promoter Rajesh Mehta, alleging that nearly 97-99 per cent of its reported revenue may have been inflated. The regulator also flagged extensive financial irregularities and non-cooperation during the probe.

What SEBI's interim order says

The order, issued by SEBI Whole-Time Member Kamlesh Chandra Varshney, described the preliminary findings as ‘egregious and unheard of', warranting urgent regulatory intervention to protect investors and preserve market integrity. ‘The aberrations prima facie noted in the matter, where approximately 97 per cent to 99 per cent of the revenue of the company is inflated, are egregious and unheard of,' the order said.

The regulator has barred promoter Rajesh Mehta from buying, selling or otherwise dealing in the securities of Rajesh Exports. The company, however, has been directed to fully cooperate with investigators and ensure true and fair disclosure of financial statements and related-party transactions.

How the probe began

The action stems from a shareholder complaint received in March 2024, which raised concerns over substantial trade receivables in the company's books. SEBI subsequently launched an investigation covering the period from April 2020 to March 2024 and appointed BDO India Services as the forensic auditor.

According to the order, Rajesh Exports repeatedly failed to provide access to key accounting systems, financial records and supporting documentation, materially restricting independent verification of a significant portion of transactions. Only a limited number of sampled transactions could be fully supported with the necessary records.

Overseas subsidiaries under lens

SEBI also reviewed financial reporting at multiple overseas subsidiaries and step-down entities, including arms based in Singapore and Switzerland. The regulator alleged that funds may have been routed through structures that obscured their source and final destination, raising fresh concerns over the credibility of the company's financial disclosures.

The market watchdog has directed Rajesh Exports to submit all pending information sought by investigators within 30 days and ordered the appointment of a new forensic auditor for a more comprehensive examination of the books and transactions.

Collateral damage on LIC

The regulatory action also weighed on Life Insurance Corporation (LIC) shares, which slipped around 1 per cent during trade. The state-owned insurer holds nearly a 10 per cent stake in Rajesh Exports, exposing its book to the unfolding governance crisis.

With a fresh forensic audit ordered and the promoter barred from securities dealings, the next 30 days will be critical in determining whether the company can mount a credible defence — or whether deeper enforcement action follows.