LIC Shares Decline Following Regulatory Scrutiny of Rajesh Exports
Rajesh Exports effect: LIC shares slip 1% as firm holds nearly 11% stake
The Economic TimesImage: The Economic Times
Shares of Life Insurance Corporation of India (LIC) fell by over 1% as Rajesh Exports experienced a 5% drop after the Securities and Exchange Board of India (Sebi) issued an interim order alleging financial irregularities and inflated revenue claims. LIC holds a 10.80% stake in Rajesh Exports.
- 01LIC owns a 10.80% stake in Rajesh Exports, a Bengaluru-based gold refining and jewellery manufacturing firm.
- 02Sebi's interim order revealed that 97-99% of Rajesh Exports' reported revenue may have been inflated.
- 03The investigation was initiated following a shareholder complaint regarding substantial trade receivables.
- 04Rajesh Exports reportedly failed to cooperate with Sebi's investigation, limiting access to crucial financial records.
- 05Sebi has mandated the appointment of a new forensic auditor to conduct a thorough examination of the company's financials.
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Shares of Life Insurance Corporation of India (LIC) declined by over 1% after Rajesh Exports, in which it holds a 10.80% stake, saw a significant 5% drop. This decline follows an interim order from the Securities and Exchange Board of India (Sebi), which alleged serious financial irregularities, including inflated revenue claims. The order, issued on June 3, indicated that nearly 97-99% of the company's reported revenue might be overstated. The investigation was prompted by a shareholder complaint received in March 2024 regarding substantial trade receivables. Sebi's findings highlighted the company's lack of cooperation during the investigation, which included withholding access to essential accounting systems and financial records. As a result, Sebi has restricted Rajesh Mehta, the promoter, from trading in the company's securities and ordered Rajesh Exports to provide all outstanding information within 30 days. A new forensic auditor will also be appointed to ensure a comprehensive review of the company's financial transactions.
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The decline in LIC shares may affect investor confidence and impact the market valuation of both LIC and Rajesh Exports.
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