The regulator directed Mishtann Foods to bring back nearly Rs 100 crore, an amount the company allegedly misappropriated through dubious transactions with related parties.
Sebi said Mishtann Foods engaged in circular trading with fictitious buyers and suppliers, many of which were shell entities controlled by the companyβs directors and their associates.
“These transactions inflated the companyβs financial performance on paper, misleading investors and regulators,” Sebi said in its order.
Sebi, in its interim order, also observed that the number of public shareholders of MFL has drastically increased from a mere 516 at the end of FY18 to 4.23 lakh by the end of the September 2024 quarter.
Hiteshkumar, the sole promoter of MFL, offloaded shares during the July-August period, garnering around Rs 50 crore. The promoter’s holding has been declining since the March 2024 quarter.Thus, it appears to be waiting for an opportune time to offload his shares to the detriment of the retail investors, the regulator said.Further, Sebi also called upon to show cause to 24 entities, including MFL, its key officials and others as to why an inquiry should not be held against them and also directed them to file their reply/objections within 21 days.
The interim order came from a detailed investigation covering the period from April 2017 to March 2024, following complaints of GST fraud and other financial irregularities by Mishtann Foods.
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