sebi:ORDER/AK/RK/2025-26/32161-32170

SEBI · SEBI · 2025-04-24 · Amit Kapoor, Adjudicating Officer

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Facts / Headnote

Penalties imposed on all 10 Noticees for violations of SEBI Act and LODR Regulations

Provisions invoked

Regulations

Parties

Holding

The Noticees violated SEBI Act and LODR Regulations by failing to recognize interest expenses on borrowings in financial statements and quarterly results, and were imposed monetary penalties under Section 15HB of the SEBI Act.

Full text

Adjudication Order in the matter of financial mis-statements of Coffee Day Enterprises Limited Page 2 of 47 covered the Financial Statements for the FY 2019-20 to FY 2023-24 (Five Financial Years) and Financial Results for the FY 2019-20 to FY 2024-25 (till September 30, 2024) (i.e. 22 quarters) (hereinafter referred to as the “Investigation Period/ IP”).

Adjudication Order in the matter of financial mis-statements of Coffee Day Enterprises Limited Page 3 of 47 dated April 25, 2025. Noticee 5 vide email dated May 06, 2025 and Noticee 3, 4, 6, 7, 8, and 9, vide email dated May 07, 2025 requested to be provided with inspection of documents in the matter. A similar request was raised by Noticee 1, 2 and 10, vide email dated May 08, 2025. Noticees were provided with an opportunity to inspect all the relevant and relied upon documents in the matter on May 19, 2025, vide email dated May 16, 2025. The Authorized Representative(AR) of the Noticees requested to reschedule the inspection to a later date, vide email dated May 17, 2025. Hence, inspection of documents was rescheduled to May 27, 2025. The opportunity of inspection of documents was duly availed by their AR on the said date.

Adjudication Order in the matter of financial mis-statements of Coffee Day Enterprises Limited Page 4 of 47 Instances of non-compliance with certain debt covenants including interest & principal repayment defaults have been described. The Company has not obtained the balance confirmations on loans from lenders. During the year certain lenders have exercised their right to recall the loan and some lenders have initiated legal action to recover dues. However, in the absence of adequate evidence, we are unable to comment on the consequential adjustments that might impact the Consolidated Financial Statements on account of non-compliance with debt covenants. Further, in view of the loan recall notices, legal disputes and pending one-time settlement with the lenders of the group, the parent company, one subsidiary and one step down subsidiary have not recognized interest on the loans outstanding as of March 31,2023 and March 31, 2024 aggregated to Rs.59.97 crores and Rs.54.32 crores respectively. As the loan recall letters provided by the lenders requires payment of interest, penal interest, non-provision of such interest is not in line with the accrual concept of accounting. Further, we have issued a disclaimer of opinion due to non-provision of interest in the parent company, 1 subsidiary and 1 stepdown subsidiary. Company as well as initiated legal disputes. In view of the loan recall notices, legal disputes and pending onetime settlement with the lenders, company has not recog

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Source: SecMarx — sebi:ORDER/AK/RK/2025-26/32161-32170. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.