Mishtann Foods shares were locked in 20 percent lower circuit for a second session in a row on December 9 as investors dumped the stock after the company received a show cause notice from the market regulator, Sebi.
The show cause notice was issued over the company's Rs 100 crore fund which Sebi stated was misappropriated or diverted through group entities. SEBI's whole-time member, Ashwani Bhatia, had highlighted "misrepresentation of large proportions" in Mishtann Foods' financial statements.
According to Sebi's notice, the company inflated its sales and purchases by recording "fictitious transactions" involving "fake or non-existent entities." These entities were allegedly created using the names of Mishtann Foods' promoters and their relatives.
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However, the company refuted Sebi's allegations while stating that its legal team is "making efforts to address the queries and take appropriate actions."
Regardless, the news of the show cause notice had spurred a meteoric spike in trading volumes in the counter in the previous session. As much as one crore shares had changed hands in Friday's session, far higher than the one-month daily traded average of 34 lakh shares. Trading volumes were also higher in today's session as 37 lakh shares of Mishtann Foods have already changed hands.
The stock has a market capitalisation of Rs 497 crore and has plummeted over 40 percent in the year-to-date period.
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