SEBI, or the Securities and Exchange Board of India, fined Coffee Day Enterprises, the parent company of Cafe Coffee Day, on January 24 for diverting funds from subsidiaries to a business connected to the promoters.
The Securities and Exchange Board of India (Sebi) said in an order that the company has been directed to pay the fine within 45 days
The company in consultation with the National Stock Exchange, is required to appoint an independent law firm to take effective steps for recovery of the outstanding dues.
Further, SEBI has directed Coffee Day Enterprises to take all the necessary measures for the recovery of entire dues from Mysore Amalgamated Coffee Estate (MACEL) and its related entities, along with the due interest that is outstanding to the subsidiaries.
SEBI found a diversion of funds of Rs 3,535 crore from seven subsidiaries of Coffee Day Enterprises to MACEL.
According to a 43-page order, SEBI found a diversion of funds amounting to Rs 3,535 crore from seven subsidiaries of Coffee Day Enterprises (CDEL) to MACEL.
The seven subsidiaries are Coffee Day Global, Tanglin Retail Reality Developments, Tanglin Developments, Giri Vidhyuth (India), Coffee Day Hotels and Resorts, Coffee Day Trading and Coffee Day Econ.
SEBI noted that out of total dues of Rs 3,535 crore on 31 July 2019, the subsidiaries have managed to recover a paltry sum of Rs 110.75 crore till 30 September 2022.
SEBI has fined Rs 25 crore for the violations pertaining to fraudulent and unfair trade practices and Rs 1 crore for the flouting of rules pertaining to LODR (Listing Obligations and Disclosure Requirements) rules.