Shares of Mishtann Foods Ltd. plummeted 20% at the open to Rs 12.42 on 6th December after the Securities and Exchange Board of India (SEBI) barred the company from raising public funds for seven years due to serious misrepresentation of its financial statements.

SEBI barred Mishtann Foods from raising public funds for seven years and directed it to recover nearly Rs 100 crore allegedly misappropriated or diverted through group entities and promoters.

SEBI’s interim order (5th December) stated the company misused Rs 49.82 crore from Rights issue proceeds and diverted Rs 47.10 crore to promoters through fictitious transactions, also banning the MD and directors from the securities market.

Mishtann Foods denied all allegations, claiming the interim order is a Show Cause Notice, and said it will seek legal remedies and follow due process.

SEBI highlighted that over 90% of bank transactions involving Mishtann Foods and its related entities were internal, with no real business operations, indicating large-scale fraud using these entities as conduits.

Managing Director Hiteshkumar Patel, controlling 43% of Mishtann Foods’ shares and linked to fake buyers/sellers through relatives, raised Rs 50 crore by selling shares, risking significant financial loss to retail shareholders, according to SEBI.

At 10:35 AM, the shares of Mishtann Foods were locked in a lower circuit of 20% at Rs 12.42.

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