New Delhi, March 2 The securities regulator, Sebi, on Monday imposed penalties totaling ₹38 lakh on Coffee Day Enterprises Ltd and several of its officials for failing to comply with mandatory accounting and disclosure requirements while preparing financial statements.
In its order, Sebi observed that the company did not adhere to Indian Accounting Standards (Ind AS) in the preparation and presentation of its standalone and consolidated financial statements, as well as quarterly financial results.
The regulator also noted that the company failed to disclose the reasons for deviations from prescribed accounting standards, as mandated under the Companies Act, 2013.
A key violation concerned the non-recognition of interest costs on borrowings in both standalone and consolidated financial statements for four financial years – FY21, FY22, FY23, and FY24.
The lapse also extended to quarterly results from the quarter ending March 31, 2021 (Q4 FY21) through September 30, 2024 (Q2 FY25), covering 15 quarters.
The regulator stated that the company was required to make disclosures strictly in accordance with extant legal provisions and not based on its own interpretation of accounting norms, which ultimately led to the interest expenses not being accounted for during the investigation period.
The order follows an investigation into alleged misstatements in Coffee Day Enterprises' financial results and statements. The probe examined possible violations of the SEBI Act and the LODR (Listing Obligations and Disclosure Requirements) Regulations.
The investigation period covered financial statements from FY20 to FY24 and financial results from FY20 to FY25 (up to September 30, 2024), spanning five financial years and 22 quarters.
According to the order, Sebi imposed a penalty of ₹10 lakh on Coffee Day Enterprises Ltd.
In addition, the officials were fined for their roles in approving and overseeing financial statements that did not comply with Ind AS and mandatory disclosure requirements.
Among the officials, ₹5 lakh each were levied on Malavika Hegde, S V Ranganath, and K R Mohan, Independent Director, ₹3 lakh each on C H Vasundhara Devi, Giri Devnur, and I R Ravish; ₹2 lakh on Ram Mohan, and ₹1 lakh each on Sadananda Poojary and Albert Hieronimus, the order noted.