By T N Ashok
For years, Rajesh Exports looked like one of India’s great corporate success stories. Founded by Bengaluru businessman Rajesh J. Mehta, the company rose from a jewellery exporter into a global gold-processing giant. It acquired Valcambi SA, one of the world’s largest gold refineries, reported annual revenues running into lakhs of crores, and earned a place in institutional portfolios across India.
Among those investors was Life Insurance Corporation of India, which accumulated a stake of about 10.8 percent. Then came a shareholder complaint. And suddenly, one of India’s largest listed companies found itself accused by the Securities and Exchange Board of India of what may become one of the biggest accounting scandals in Indian corporate history.
In a blistering interim order running more than 100 pages, SEBI alleged that Rajesh Exports may have overstated revenues by approximately ₹15.15 lakh crore over five years, primarily through figures attributed to overseas subsidiaries.
If the allegations are ultimately proven, the question will not merely be how Rajesh Exports did it. The larger question will be: How did everyone else miss it?
According to SEBI, between FY21 and FY25, nearly all of Rajesh Exports’ consolidated revenues—between 97 and 99 percent—came from overseas subsidiaries, especially Valcambi.
On paper, the numbers were staggering. Yet when investigators attempted to verify those revenues through subsidiary-level records, the figures allegedly could not be reconciled. The regulator’s findings suggest a gap so enormous that it challenges belief itself.
SEBI has alleged that approximately ₹15.15 lakh crore of reported revenues could not be substantiated through underlying records. For perspective, that figure exceeds the annual GDP of many countries.
The regulator described the discrepancies as unprecedented and questioned how a company could report massive revenues when the operating entities appeared to account for only a fraction of those amounts.
Rajesh Exports strongly disputes the allegations. The company argues that SEBI misunderstood the accounting treatment adopted by Valcambi and that the regulator compared processing income with gross transaction values. Rajesh Mehta has publicly stated that “nothing in it is true” and says the company will provide supporting documentation. That defense will now be tested. Corporate fraud rarely emerges overnight. Almost always, warning signals appear long before regulators arrive.
The Rajesh Exports case raises troubling questions about whether those signals were ignored. For years, the company’s revenues appeared extraordinarily large compared with its profitability. Analysts frequently observed that despite reporting turnover running into lakhs of crores, margins remained remarkably thin. Its stock price also behaved strangely. While reported revenues suggested a giant enterprise, investors steadily marked down the stock.
From above ₹1,000 in early 2023, the share price collapsed by more than 80 percent. Markets often detect problems before regulators do. The persistent disconnect between reported financial performance and market valuation should perhaps have attracted deeper scrutiny. Instead, many institutions continued holding the stock.
The most uncomfortable questions may be directed not at Rajesh Exports but at LIC.As India’s largest institutional investor, LIC occupies a unique position. Every investment it makes is ultimately backed by millions of policyholders. When LIC acquires a substantial stake in a listed company, investors often interpret it as a vote of confidence. Yet LIC remained a major shareholder even as Rajesh Exports’ stock entered into a prolonged decline.
Today, LIC owns approximately 10.8 percent of the company. Depending on the acquisition of prices of those shares, the erosion in value runs into thousands of crores. The obvious question is whether LIC’s due diligence mechanisms failed. Did LIC’s investment managers examine subsidiary-level disclosures? Did they analyse cash flows rather than headline revenues? Did they question why one of India’s supposedly largest companies was steadily losing investor confidence?
At present there is no evidence that LIC knew of any alleged irregularities. What exists instead is evidence of what appears to be a major institutional failure to identify potential risks before SEBI intervened. No major accounting scandal can be examined without asking another uncomfortable question about the role of the auditors.
Where were the auditors? SEBI’s order notes that investigators sought audit working papers and supporting documentation. The regulator also recorded instances where promised information was allegedly not provided. Auditors serve as the first line of defense against accounting manipulation.
If massive discrepancies existed, critics would ask whether warning signs were overlooked. India has witnessed similar debates before. From the Satyam Computer Services accounting scandal to the collapse of IL&FS, auditors have repeatedly found themselves under scrutiny after financial irregularities surfaced.
The Rajesh Exports case has inevitably spawned conspiracy theories. Social media discussions have linked the company to other major corporate groups, including the Adani Group, largely because both have featured prominently in debates about institutional investment and LIC’s exposure. But speculation is not evidence. As of today, there is no publicly available evidence establishing any collusion between Rajesh Exports, LIC and Adani entities in relation to SEBI’s allegations.
The fact that LIC invested in multiple large companies does not by itself indicate wrongdoing. The real story may be less dramatic and more disturbing: A combination of weak oversight, excessive reliance on reported numbers, inadequate verification, and delayed regulatory intervention. Institutional failure often looks like a conspiracy because so many gatekeepers fail simultaneously.
The Rajesh Exports episode would not be the first time LIC has suffered losses from controversial corporate bets. Over the past two decades, LIC has been exposed to several troubled companies, including investments linked to: Infrastructure Leasing & Financial Services; Yes Bank; Dewan Housing Finance Corporation; Reliance Capital; and Satyam Computer Services.
In each case, policyholders indirectly bore the consequences of governance failures, accounting issues, lending excesses, or management of misconduct. The pattern raises a broader policy question: Should a government-owned insurer be expected to act as a commercial investor or as a stabilizing instrument for troubled corporations?
The Rajesh Exports allegations arrive after two decades marked by major economic crimes and financial scandals. Among the most significant: Satyam Computer Services accounting scandal, Punjab National Bank fraud, IL&FS crisis, DHFL fraud investigation, National Spot Exchange crisis, Kingfisher Airlines debt default, ABG Shipyard banking fraud, Winsome Diamonds controversy
Each scandal exposed weaknesses in India’s systems of auditing, banking supervision, corporate governance and regulatory enforcement. The future of Rajesh Exports now rests on evidence; SEBI has directed the company to provide documents and explanations. A fresh forensic audit is expected to examine transactions, subsidiary records, and fund flows in greater detail. Rajesh Mehta and Rajesh Exports will have the opportunity to rebut every allegation.
The final outcome could range from exoneration on key issues to one of the most significant securities fraud cases in Indian history. But regardless of the eventual verdict, one conclusion is already difficult to avoid. If a listed company could allegedly report revenue discrepancies running into lakhs of crores before regulators intervened, the scandal is larger than Rajesh Exports.
It is a story about the institutions that were supposed to ask questions and did not. The real mystery is not how the alleged inflation happened. The real mystery is why so many sophisticated investors, auditors, analysts, directors, and regulators failed to detect it sooner. And if they missed this, investors are entitled to ask: what else are they missing today? (IPA Service)
