SEBI Penalised Coffee Day Enterprises and Officials With ₹38 Lakh Penalty

The Securities and Exchange Board of India (SEBI) has imposed cumulative penalties of ₹38 lakh on Coffee Day Enterprises Ltd and several of its officials for violations related to accounting standards and disclosure requirements in financial reporting.

Accounting Norms Not Followed

In its order, SEBI observed that the company failed to comply with Indian Accounting Standards (Ind AS) while preparing and presenting its standalone as well as consolidated financial statements, along with quarterly financial results.

The regulator also pointed out that the company did not clearly disclose the reasons for deviating from prescribed accounting standards, as mandated under the Companies Act, 2013.

Interest Cost Not Recognised

One of the major violations identified was the non-recognition of interest expenses on borrowings in both standalone and consolidated financial statements for four financial years, FY21, FY22, FY23 and FY24.

The discrepancy also extended to quarterly results from the quarter ended March 31, 2021 (Q4 FY21) through September 30, 2024 (Q2 FY25), covering a total of 15 quarters.

SEBI stated that disclosures must strictly adhere to prevailing legal provisions and cannot be based on a company’s own interpretation of accounting standards. The regulator noted that this approach resulted in interest costs not being accounted for during the investigation period.

Investigation Scope

The order follows a detailed probe into alleged misstatements in the company’s financial statements and results. The investigation examined possible violations of the SEBI Act and the LODR (Listing Obligations and Disclosure Requirements) Regulations.

The review covered financial statements from FY20 to FY24 and quarterly results from FY20 to FY25 (up to September 30, 2024), spanning five financial years and 22 quarters.

Also Read: SEBI Removes 1.2 Lakh Misleading Finfluencer Posts Using AI Surveillance Tool ‘Sudarshan’

Penalties Imposed

SEBI levied a penalty of ₹10 lakh on Coffee Day Enterprises Ltd. In addition, fines were imposed on company officials for approving and overseeing financial statements that did not comply with Ind AS and mandatory disclosure norms.

Among those penalised, ₹5 lakhs each was imposed on Malavika Hegde, S V Ranganath and K R Mohan (Independent Director). A penalty of ₹3 lakh each was levied on C H Vasundhara Devi, Giri Devnur and I R Ravish. Further, ₹2 lakh was imposed on Ram Mohan, while ₹1 lakh each was slapped on Sadananda Poojary and Albert Hieronimus, according to the order.

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