SEBI slaps Rs 26 cr fine on Coffee Day Enterprises

NEW DELHI: Capital markets regulator SEBI on Tuesday imposed a penalty of Rs 26 crore on Coffee Day Enterprises, which runs Cafe Coffee Day, for diversion of funds from subsidiaries to a company related to promoters.

The company has been directed to pay the fine within 45 days, the Securities and Exchange Board of India (Sebi) said in an order.

Also, SEBI has directed Coffee Day Enterprises Ltd to take all necessary steps for recovery of entire dues from Mysore Amalgamated Coffee Estates Ltd (MACEL) and its related entities along with due interest that are outstanding to the subsidiaries.

Further, the company in consultation with the NSE, is required to appoint an independent law firm to take effective steps for recovery of the outstanding dues.

SEBI found diversion of funds amounting to Rs 3,535 crore from 7 subsidiaries of Coffee Day Enterprises Ltd (CDEL) to Mysore Amalgamated Coffee Estates Ltd, an entity related to promoters of CDEL, according to its 43-page order.

The seven subsidiaries are -- Coffee Day Global, Tanglin Retail Reality Developments, Tanglin Developments, Giri Vidhyuth (India) Ltd, Coffee Day Hotels and Resorts, Coffee Day Trading and Coffee Day Econ.

“The money that was transferred from the seven subsidiaries to MACEL has gone to the personal accounts of VGS (VG Siddhartha), his family and related entities and thus remains in the system,” Sebi said.

VG Siddhartha, who was the Chairman of the Coffee Day Group, had reportedly committed suicide in July 2019. It was reported that he had left behind a suicide note addressed to the board of directors and Coffee Day family wherein he revealed that he was in deep debt.