Mutual Funds Avoid Rajesh Exports Amidst Declining Performance, LIC Holds Significant Stake

Rajesh Exports Stock in Focus After SEBI Passes Interim Order

The Securities and Exchange Board of India (SEBI) has passed an interim ex-parte order against Rajesh Exports Ltd (REL) and its Chairman and Managing Director Rajesh Mehta, citing prima facie findings of financial misrepresentation, fund-routing irregularities, and non-cooperation during an ongoing investigation.

According to the latest data from Ace Mutual Fund, no domestic mutual fund currently owns shares of Rajesh Exports Ltd, even as Life Insurance Corporation of India (LIC) remained one of the company's largest institutional shareholders with more than a 10 percent stake. While mutual funds collectively manage over Rs 80 lakh crore of investor money and typically invest across hundreds of listed companies, they have stayed away from Rajesh Exports.

The regulator noted that nearly 97-99 percent of the company's consolidated revenue originated from foreign subsidiaries, particularly Valcambi SA. However, Valcambi's audited standalone financial statements reflected only a small fraction of the revenues reported at the consolidated level. Rajesh Exports allegedly misrepresented consolidated revenues of approximately Rs 15.15 lakh crore during FY21-FY25, accounting for 99.8 percent of its reported consolidated revenue over the period.

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Foreign institutional investors have also been reducing their exposure to Rajesh Exports. Total FII ownership declined from 17.6 percent in March 2023 to 14.26 percent by March 2026. Among the notable foreign investors that continue to hold the stock are Bridge India Fund with 8.46 percent and Schwab Fundamental Emerging Markets Equity ETF with 2.70 percent.

Rajesh Exports' stock has already been under pressure, falling around 40 percent over the past year. Following SEBI's order, the stock opened nearly 5 percent lower at around Rs 103 on June 5. The company has also faced regulatory scrutiny in the past, with the National Stock Exchange seeking clarification from Rajesh Exports over its failure to disclose its cash-flow statement for FY23.

LIC continued to hold its stake without any change since at least September 2023, according to shareholding disclosures.

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