Penny Stocks: Due to SEBI’s strict action, the share of Mishtann Foods Ltd fell so much that they could not rise and remained on the lower circuit throughout the day, that is, there was no buyer in the market.
The stock has fallen 11.73% in 5 days. The stock price is 12.42 rupees.
The market regulatory body Securities and Exchange Board of India (SEBI) has barred Mishtann Foods from raising public funds for 7 years. Due to this, investors got a big shock and they started selling shares in a hurry and the buyer left the market.
Due to this, the share of Mishtann Foods Ltd came to a lower circuit of 20 percent at Rs 12.42 (Mishtann Foods Share Price) and closed at the same.
Talking about the movement of shares in a year, on 3 December 2024, it was at a one-year low of Rs 11.77, and on 6 February 2024 it was at a one-year high of Rs 26.37.
Why Did SEBI Take Strict Action Against Mishtann Foods?
SEBI has barred Mishtann Foods Ltd from raising public funds for seven years over serious irregularities in financial statements. Apart from this, SEBI has asked Mishtan Foods to recover about Rs 100 crore of misappropriation through group companies and promoters.
In an interim decision issued on December 5th, SEBI ordered the company to pay back the sum of 49.82 crore rupees from the rights sale.
It was subsequently misused or transferred through group entities and 47.10 crore rupees was transferred to promoters or directors and their family members by way of fraudulent purchases or sales.
Other than that, SEBI has barred the MD and various other executives of the firm from gaining access to the market for securities pending the company receives further instructions.
In this instance the company made clear it was Friday afternoon that this interim notice was a show cause notice and clarification was requested from the company regarding the basis of some claims.
The company has denied all the allegations. The company said in an exchange filing that it would take legal action against SEBI’s order.
What Did SEBI’s Investigation Reveal?
A market regulator’s full-time member said in the order that the company exaggerated the financial statements and committed fraud on a large scale.
He claimed that more than 90% of the debit and credit transactions of these companies i.e. transactions were either made between them or together with Mishtann Foods Ltd, which shows the amount of fraud. These entities did not have any business of their own.
SEBI also found that the company’s business and the interests of more than 4.2 lakh shareholders were controlled by MD Hitesh Kumar Gaurishankar Patel, who is also the sole promoter of the company and owns 43% of the company’s shares.
He stated that he has control over counterfeit buyers and sellers for Mishtan Foods through his relatives. SEBI says that Hitesh recently raised around ₹50 crore by selling 3 crore shares of the company and still holds 47 crore MFL shares.
It shows the danger of impending financial losses, especially for retail investors who are unaware of Hitesh’s plans.
Quick Fact
| Company name | Mishtann Foods |
|---|---|
| Fallen in 5 days | 11.73% |
| Regulatory body | SEBI |
| SEBI action | Barred from raising public funds for 7 years |
| Reason for action | Financial irregularities, exaggerated statements |
| Refund order | ₹49.82 crore |
| Misappropriated funds | ₹100 crore |
| Fraudulent transfers | ₹47.10 crore to promoters or family members |
| Allegation | Fraudulent financial transactions, inflated statements |
| Key individual | Hitesh Kumar Gaurishankar Patel |
| Hitesh’s role | MD and sole promoter |
| Hitesh’s shareholding | 43% of the company |
| Funds raised by Hitesh | ₹50 crore by selling 3 crore shares |
| SEBI restrictions | Market access is barred for MDs and executives |
| Shareholders impacted | 4.2 lakh |
| Share price on 5th Dec 2024 | ₹12.42, 20% lower circuit |
| Legal stance by the company | Denied allegations, plans legal action |
Disclaimer: The website and its content are for informational purposes only and should not be considered investment advice.
