A Coffee oversight or broken cup?

Sandeep Goel    Sunday, 1 September 2024

On Monday, 19th August 24 the Coffee Day Enterprises Ltd. (CDEL) was in news.

For funding diversion case …

The National Financial Reporting Authority (NFRA), the audit regulator fines three entities Rs. 10.75 crore for audit errors pertaining to Coffee Day's 2018–19 financial statements: BSR & Associates LLP Rs 10 crore, Rs 50 lakh on Aravind Maiya, and Rs 25 lakh on Amit Somani.

There was diversion of Rs 3,535 crore from seven subsidiary companies of CDEL, the listed company to Mysore Amalgamated Coffee Estate Ltd (MACEL), an entity controlled by the company's promoters.

• Upon reviewing the Consolidated Financial Statements of both CDEL and MACEL, it was found that, with the exception of one, MACEL had no business dealings with six of the seven subsidiary firms.
• Funds from CDEL's subsidiaries were transferred through MACEL to the personal accounts of CMD, his family members, and organizations under his or their control. These loans and advances were never repaid.

Ethical accounting road is still too far – who bears the cost?

Of course, shareholders!