Winning Bizness Desk
Mumbai.A sharp regulatory action by the Securities and Exchange Board of India (Sebi) has triggered fresh concerns around one of India's best-known gold companies. Shares of Rajesh Exports crashed 5% and remained locked in the lower circuit after Sebi imposed an interim trading ban on founder and chairman Rajesh Mehta. The market regulator's preliminary findings suggest that nearly 99% of the company's reported revenue may have been overstated, raising questions over one of the biggest suspected revenue inflation cases in corporate India.
Sebi flags startling financial irregularities
In a 109-page interim order, Sebi said its initial investigation uncovered serious irregularities in the company's financial reporting. According to the regulator, Rajesh Exports may have significantly exaggerated its reported sales figures.
The watchdog described the scale of the suspected overstatement as "shocking", noting that almost the entire reported revenue could exist only on paper if the findings are ultimately confirmed.
Key points from Sebi's order:
- Interim trading ban imposed on Rajesh Mehta
- Investigation points to possible inflation of reported sales
- Nearly 99% of reported revenue under scrutiny
- Detailed investigation remains ongoing
Company rejects allegations, cites confusion
Rajesh Exports responded through a stock exchange filing, saying it received Sebi's interim order on June 3, 2026. The company stressed that the order is preliminary and does not represent any final adverse finding.
It firmly rejected allegations of revenue inflation and maintained that all reported revenue figures are accurate. According to the company, the issue appears to stem from a communication gap and misunderstanding between Sebi and the management.
Shares remain under intense selling pressure
Investor sentiment turned sharply negative following the regulatory action. Throughout Thursday's trading session, Rajesh Exports shares remained locked at the 5% lower circuit limit.
The absence of buyers and continued selling pressure reflected growing market concerns about the outcome of the investigation and its possible impact on the company's future.
A businessman who built a global gold giant
Sixty-year-old Rajesh J. Mehta, based in Bengaluru, founded Rajesh Exports in 1989 after entering the precious metals business at a young age. Beginning with silver trading, he later expanded into jewellery manufacturing and gold refining.
Today, the company purchases raw gold, refines it into pure gold, manufactures jewellery and sells it across global markets. Rajesh Exports reports annual revenue of around $39.2 billion, equivalent to nearly ₹3.75 lakh crore.
The defining moment in the company's journey came in 2015 when it acquired Switzerland's renowned Valcambi refinery, regarded as one of the world's largest gold refining facilities. The acquisition significantly strengthened its global standing.
Potential fallout for investors and LIC
Market experts estimate that if Sebi's claims are eventually proven correct, the suspected revenue discrepancy could reach nearly ₹15.15 lakh crore.
The impact is already being felt by institutional investors:
- Life Insurance Corporation of India (LIC) owns 10.8% of Rajesh Exports
- LIC shares slipped about 1% after the order
- Retail investors face rising concerns over capital erosion
- Further declines could reduce the value of institutional holdings
What happens next?
Sebi's order remains interim, meaning the investigation is far from complete. Rajesh Mehta and the company will be given an opportunity to present their defence before any final decision is taken.
If the allegations are substantiated during the final investigation, Sebi could impose substantial financial penalties, extend market bans on promoters and potentially refer the matter to criminal investigative agencies.
Understanding revenue inflation
Revenue inflation occurs when a company reports earnings or sales higher than its actual business activity to appear financially stronger. Such practices are often used to attract investors, secure loans or support higher share valuations. In many cases, sales invoices may be generated without any genuine movement or delivery of goods, creating an artificial picture of business growth
