Shares of Mishtann Foods witnessed a huge decline on Friday. After strict action by market regulator Securities and Exchange Board of India (SEBI), the company's shares fell by 20% and closed at a lower circuit of Rs 12.42. SEBI has banned the company from raising public funds for seven years. Due to this, investors became restless and no buyers were seen in the stock market.

Why did SEBI take action?

SEBI has imposed this ban on Mishtann Foods due to financial irregularities and serious irregularities. The regulator has accused the company of misappropriation of Rs 100 crore through group companies and promoters. SEBI has ordered the company to bring back Rs 49.82 crore raised from its rights issue, which was wrongly diverted. Apart from this, Rs 47.10 crore was transferred to promoters and directors through fraudulent transactions.

Ban on directors and disclosure of fraud

SEBI has barred the company's Managing Director (MD) Hitesh Kumar Gaurishankar Patel and other directors from participating in the securities market until further orders. SEBI's investigation found that the company had exaggerated financial statements and fraudulently represented more than 90% of the transactions.

According to SEBI, Mishtann Foods MD Hitesh Patel put retail investors at huge risk with 43% shares of the company. Recently, he raised Rs 50 crore by selling 3 crore shares of the company.

Company rescue and future strategy

Mishtann Foods has rejected SEBI's allegations and said that this order is an interim show cause notice and the company is planning to take legal action. The company claimed that it is ready to give a proper answer to these allegations.

Not good news for investors

After SEBI's action and disclosure of financial irregularities, the shares of Mishtann Foods have fallen drastically. In a year, the stock has traded between a low of Rs 11.77 and a high of Rs 26.37. This matter not only raises questions on the credibility of the company but also creates great concern for retail investors.