Regulator imposes Rs 26 crore fine on Coffee Day

2 days ago 13

Read Original Article At Source Website

Read Original Article At Source

Mumbai: Sebi has imposed a fine of ₹26 crore on Coffee Day Enterprises, which runs Cafe Coffee Day, for alleged diversion of funds from subsidiaries to an entity related to the promoters. The regulator said based on its detailed investigation, it found diversion of funds amounting to ₹3,535 crore from seven subsidiaries of

to Mysore Amalgamated Coffee Estates (MACEL), an entity related to promoters of Coffee Day Enterprises.

Coffee Day Enterprises has a total of 49 subsidiaries.

The seven subsidiaries through which funds were diverted include Coffee Day Global, Tanglin Retail Reality Developments, Tanglin Developments, Giri Vidhyuth (India), Coffee Day Hotels and Resorts Pvt Ltd, Coffee Day Trading and Coffee Day Econ Pvt. Ltd. Sebi has directed Coffee Day Enterprises to take all necessary steps for recovery of entire dues from MACEL and its related entities, along with due interest outstanding to its subsidiaries.

Coffee Day Enterprises, in consultation with the NSE, would have to appoint an independent law firm to take effective steps for recovery of the outstanding dues. VG Siddhartha, 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 dated July 27, 2019 addressed to the board of directors and Coffee day family wherein he revealed that he was in deep debt.

"The money that was transferred from the seven subsidiaries to MACEL has gone to the personal accounts of VGS (V.G. Siddhartha), his family and related entities and thus remains in the system," Sebi said in its order on Tuesday. According to Securities and Exchange Board of India, V G Siddhartha's family owns about 91.75% stake in MACEL and are also the promoters of Coffee Day Enterprises.

The market regulator said out of the total dues of Rs. 3,535 Crore as on July 31, 2019, the subsidiaries have managed to recover a paltry sum of Rs.110.75 crore until September 30, 2022.

"At this pace of recovery, there is no real possibility of the subsidiaries recovering money even in perpetuity. This also shows lack of interest on part of the Noticee (Coffee Day Enterprises) and its subsidiaries to recover the outstanding dues. The Company's submissions that it has started the process of recovery of the outstanding amount from MACEL cannot be given credence," Sebi said.

(What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

Download The Economic Times News App to get Daily Market Updates & Live Business News.

Read Original Article At Source Website

Read Original Article At Source

*Note: Their will be lot of difference between article source and this article. We have changed the way of writing from original source website.

Sponsored