Mishtann Foods shares were locked in a 20% lower circuit for the second consecutive day on December 9, following the company receiving a show cause notice from the Securities and Exchange Board of India (SEBI). This drastic drop comes as investors react to the market regulator’s allegations regarding the misappropriation of funds amounting to Rs 100 crore, which SEBI claims was diverted through group entities.
SEBI’s notice highlighted the “misrepresentation of large proportions” in Mishtann Foods’ financial statements. According to the regulator, the company inflated its sales and purchases by recording fictitious transactions involving non-existent entities. These entities were allegedly created using the names of the promoters and their relatives. In response, Mishtann Foods has denied these allegations and stated that its legal team is working to address the queries raised by SEBI.
This announcement has caused a significant spike in trading volumes. On the previous day, one crore shares changed hands, much higher than the one-month daily average of 34 lakh shares. In today’s session, 37 lakh shares have already been traded. The company’s market capitalization stands at Rs 497 crore, and its stock has fallen by over 40% year-to-date.
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