Shares of Mishtann Foods Ltd (MFL) tumbled 20% today to ₹12.42 following an interim order by the Securities and Exchange Board of India (SEBI) on December 5. The stock hit a lower circuit after SEBI directed the company to recover nearly ₹100 crore allegedly misappropriated or diverted through group entities and promoters.
Key SEBI Directives
- Fund Recovery:
- SEBI instructed Mishtann Foods to retrieve ₹49.82 crore from the rights issue proceeds allegedly diverted through group entities.
- An additional ₹47.10 crore, reportedly transferred to promoters and directors via fictitious sales and purchases, must also be recovered.
- Market Restrictions:
- The company is barred from raising funds from the public.
- Promoters, senior management, and 12 other entities are restrained from accessing the securities market or associating with registered intermediaries until further notice.
In its findings, SEBI’s Whole-time Member Ashwani Bhatia noted substantial misrepresentation in Mishtann Foods’ financial statements. The regulator accused the company of:
- Inflating sales and purchase figures through fake transactions.
- Creating shell entities linked to promoters and directors to channel funds.
- Using over 90% of transactions in group entities’ bank accounts for fraudulent transfers involving the company.
The interim order has cast significant doubt on the company’s corporate governance practices, impacting investor sentiment and triggering today’s sharp decline in its share price.
Stock Performance
Mishtann Foods’ stock has been under pressure recently, with:
- A 12.35% drop over the last five days.
- A year-to-date decline of 26.41%.
- A one-year fall of 20.91%.
