SEBI Turns Up the Heat: Kohinoor Foods Faces Compliance Grill

In a regulatory jolt to the packaged food sector, Kohinoor Foods Ltd (NSE: KOFO.NS) has been served a Show Cause Notice by the Securities and Exchange Board of India (SEBI). The notice, issued under the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, raises serious questions about the company’s compliance practices and financial disclosures.

 

While the full details of the notice are yet to be made public, early indications suggest that SEBI is scrutinizing Kohinoor’s recent quarterly disclosures, particularly around defaults on loan repayments and interest payments to financial institutions.

 

What Is a Show Cause Notice?

A Show Cause Notice (SCN) is a formal communication from a regulatory authority asking a company to explain or justify its actions before further proceedings are initiated. In SEBI’s context, it often precedes penalties, restrictions, or enforcement actions.

 

The issuance of an SCN implies:

Background: Financial Red Flags

Kohinoor Foods has been under the scanner for several quarters due to its erratic financial performance and mounting debt obligations. According to its latest filings:

 

Net profit surged to ₹375.63 crore in Q4 FY25, a staggering 68,000% jump from ₹0.55 crore in the previous year

 

Sales declined by 18.69% to ₹19.66 crore in the same quarter

 

The company has defaulted on interest and principal repayments on loans from banks and financial institutions

 

This unusual profit spike amid declining sales has raised eyebrows among analysts and regulators alike.

 

SEBI’s Concerns

SEBI’s notice reportedly centers on:

The regulator has asked Kohinoor Foods to respond with detailed explanations and supporting documents within a stipulated timeframe.

 

Market Reaction

Despite the regulatory overhang, Kohinoor Foods’ stock saw a 7.4% intraday jump, reaching ₹47.45, possibly driven by speculative buying or short-covering. However, analysts caution that the rally may be short-lived if SEBI’s findings lead to punitive action.

 

Other rice exporters like Chaman Lal Setia Exports and LT Foods also saw gains, but their fundamentals remain stronger and less controversial.

 

What’s Next?

Kohinoor Foods is expected to:

The company’s next board meeting is scheduled for August 23, 2025, where this issue is likely to dominate discussions.

 

Investor Advisory

Investors are advised to:

Sources: The Economic Times, SEBI Orders and Notices – Official SEBI Website, Tickertape