The order comes into effect with immediate effect, the market regulator said, adding, “The notified shall remit/pay said penalty amount within 45 days of receipt of this order.”

SEBI also ordered Coffee Day Enterprises to take all necessary steps to collect all dues from Mysore Amalgamated Coffee Estates Ltd (MACEL) and its related entities, and interest due to subsidiaries.

The company, in consultation with the NSE, is required to appoint an independent solicitor to take effective action for the collection of unpaid dues, the order says.

SEBI discovered misappropriation of funds in the amount of 3,535 crores from 7 subsidiaries of Coffee Day Enterprises Ltd (CDEL) to Mysore Amalgamated Coffee Estates Ltd, an entity related to the 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 went to the personal accounts of VGS (VG Siddhartha), his family and related entities and therefore remains in the system,” SEBI said.

VG Siddhartha, who was the chairman of the Coffee Day group, allegedly committed suicide in July 2019. It was reported that he left a suicide note addressed to the board and the Coffee Day family in which he disclosed that he was deeply in debt.

According to the order, MACEL is almost entirely owned by the VGS family with a 91.75% interest. In addition, the VGS family is a promoter of CDEL.

The regulator noted that out of the total contributions of 3,535 crore as of July 31, 2019, the subsidiaries managed to recover a paltry sum of 110.75 crores until September 30, 2022.

In view of the diversion, SEBI imposed a fine of 25 crore for violations relating to fraudulent and unfair business practices and 1 crore for non-compliance with rules relating to Listing Obligations and Disclosure Requirements (LODR).

Although the directors and key executives (past and present) of CDEL and its subsidiaries have not been named as parties to the ongoing proceedings, SEBI has stated that a detailed review of the acts is imperative. and omissions of such persons.

Following Siddhartha’s death, CDEL’s Board of Directors engaged the services of Ashok Kumar Malhotra, retired DIG of the Central Bureau of Investigation, and Agastya Legal LLP in September 2019 to investigate the accounting records of the company and its subsidiaries.

SEBI had also opened an investigation into the matter on its own to determine whether funds had been diverted to related entities, which would have resulted in a possible breach of regulatory standards.

Meanwhile, Coffee Day Enterprises reported a total default of 465.66 crores on interest payments and repayment of principal on loans from banks, financial institutions and unlisted debt securities as NCD and NCRPS, for the quarter ended September 30, 2022.

CDEL, which is deleveraging through asset resolution, has a total debt of 490.66 crores including short and long term debt.

“The delay in debt service is due to the liquidity crisis,” Coffee Day Enterprises Ltd said in a regulatory update from last year in October.

Coffee Day Enterprises Ltd is the parent company of Coffee Day Group.

The Company, primarily through its subsidiaries, associates and joint ventures, operates in multiple sectors such as coffee retail and export, leasing of commercial office space, financial services, integrated multimodal logistics, hospitality and information technology (IT)/information technology enabled. services (ITS).

With the contributions of the agency

Catch all the company news and updates on Live Mint. Download the Mint News app to get daily market updates and live trade news.

More less

Source link

Leave A Reply