Sebi Fines Coffee Day Enterprises ₹38 Lakh, Company & Top Officials Penalised For Accounting & Disclosure Lapses

Mumbai: Markets regulator Sebi has imposed a total penalty of Rs 38 lakh on Coffee Day Enterprises Ltd and several of its officials for failing to follow proper accounting standards and disclosure rules while preparing financial statements.

Violation of Accounting Standards

In its order, Sebi said the company did not comply with Indian Accounting Standards (Ind AS) while preparing its standalone and consolidated financial statements, as well as quarterly financial results.

The regulator also found that Coffee Day Enterprises failed to clearly explain deviations from prescribed accounting standards, as required under the Companies Act, 2013.

Interest Cost Not Recognised

One of the major violations involved non-recognition of interest costs on borrowings. According to Sebi, the company did not account for interest expenses in both standalone and consolidated financial statements for four financial years — FY21, FY22, FY23 and FY24.

The lapse also covered quarterly results from Q4 FY21 (quarter ended March 31, 2021) to Q2 FY25 (quarter ended September 30, 2024). In total, 15 quarters were affected.

Sebi said companies must strictly follow legal provisions while making disclosures and cannot rely on their own interpretation of accounting norms.

Investigation Covered Five Years

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

The investigation 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.

Penalties on Company and Officials

Sebi imposed a penalty of Rs 10 lakh on Coffee Day Enterprises Ltd.

Among officials, Rs 5 lakh each was imposed on Malavika Hegde, S V Ranganath and K R Mohan (Independent Director). Rs 3 lakh each was levied on C H Vasundhara Devi, Giri Devnur and I R Ravish. Ram Mohan was fined Rs 2 lakh, while Sadananda Poojary and Albert Hieronimus were fined Rs 1 lakh each.

The regulator said these officials were responsible for approving and overseeing financial statements that did not meet required standards.