Shares of Mishtann Foods witnessed a surge in demand on Wednesday, with the stock soaring up to 9.2% to reach ₹9.78 per share on the BSE. By around 11:48 AM, a total of 14.96 crore shares of the company were traded on the BSE.
Mishtann Foods shares had experienced a significant decline in the previous 4 sessions, falling 37% after Mishtann Foods received a show cause notice from the Securities and Exchange Board of India (SEBI) on December 5, 2024. The sharp drop in stock price followed the news of SEBI’s action against the company.
In response to SEBI’s show cause notice and the barring of Mishtann Foods, its promoter Hiteshkumar Gaurishankar Patel, and four other entities from the securities market, Mishtann Foods issued a clarification. The company disagreed with SEBI’s allegations, calling them baseless. In an exchange filing, Mishtann Foods stated that it was seeking legal advice on the legality of SEBI’s interim order and considered the action unsustainable. The company’s legal team expressed that the order is not sustainable in law and vowed to take necessary steps to challenge it, emphasizing that the matter is sub-judice.
Mishtann Foods assured its stakeholders that its business operations and growth plans would remain unaffected by the regulatory actions. The company also guaranteed that stakeholders’ interests would be safeguarded throughout the process.
SEBI’s investigation into Mishtann Foods revealed the company’s involvement in circular trading with fictitious buyers and suppliers, many of which were shell entities controlled by the company’s directors and associates. This activity was believed to have inflated the company’s financials.
Additionally, SEBI noted a dramatic increase in the company’s public shareholder base, which grew from 516 in FY18 to 4.23 lakh in September 2024. Furthermore, Patel sold shares worth Rs 50 crore between July and August 2024, leading to a decrease in promoter holdings.
SEBI has issued show-cause notices to 24 entities, including Mishtann Foods and its key officials, requesting their responses within 21 days. The investigation, which spans activities between April 2017 and March 2024, was initiated following complaints of GST fraud and financial irregularities.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
Published on: Dec 11, 2024, 2:01 PM IST
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