Markets regulator Securities and Exchange Board of India (SEBI) has imposed a total penalty of ₹38 lakh on Coffee Day Enterprises Ltd (CDEL) and several of its present and former directors and key officials for serious lapses in financial reporting, including the prolonged non-recognition of interest expenses on borrowings, which led to materially misstated financial statements over multiple years.
In addition to penalising the company, SEBI has levied fines on several present and former directors and key officials. These include: Malavika Hegde, whole-time director (WTD), chief executive officer (CEO) and audit committee member, SV Ranganath (independent director, interim chairman and audit committee member), KR Mohan and Albert Hieronimus (both independent directors and audit committee members), Dr CH Vasundhara Devi (independent director), IR Ravish (non-executive director), Giri Devnur (independent director), R Ram Mohan (chief financial officer-CFO) and Sadananda Poojary, company secretary and compliance officer of CDEL.
In its adjudication order, SEBI says the company and its key managerial personnel failed to comply with Indian Accounting Standards (Ind AS) and listing regulations by not accounting for interest costs on substantial borrowings FY20–21 onwards, despite loan defaults, recalls and legal proceedings initiated by lenders. The investigation covered standalone and consolidated financial statements for four financial years, as well as quarterly results up to September 2024.
According to SEBI, CDEL failed to recognise interest expenses amounting to ₹489.49 crore during the review period. As of 31 March 2024, the company had borrowings of around ₹1,289 crore but did not account for finance costs exceeding ₹114 crore, leading to a significant understatement of reported losses.
CDEL justified the omission on the grounds of ongoing negotiations with lenders for one-time settlements and an expectation that interest would be waived. The regulator observed that interest costs were not provided even before settlement discussions began and, in some cases, were excluded solely because the company believed lenders would grant waivers.
According to SEBI, the non-recognition of interest expenses began in the quarter ended March 2021 and continued for at least 15 consecutive quarters, resulting in an understatement of losses. The regulator held that this accounting treatment violated Ind AS 1, 23, 32 and 109, as well as Section 129 of the Companies Act, which requires financial statements to present a true and fair view.
SEBI rejected the CDEL contention that disclosures in the notes to accounts and quarterly results were sufficient. It emphasised that disclosure cannot replace compliance and that departures from accounting standards are permitted only in rare circumstances, not based on anticipated interest waivers.
The regulator also held the board of directors, audit committee members, the CFO (chief financial officer) and the compliance officer accountable, noting that the lapses occurred with the board's knowledge and approval. Despite audit qualifications and known deviations, directors repeatedly approved financial statements certifying compliance with accounting standards, SEBI said.
The order further pointed out failures by the audit committee to ensure the accuracy and credibility of financial disclosures, while the CFO and company secretary failed to ensure regulatory compliance. SEBI also took note that a settlement application filed by the company and its officials was rejected in November 2025.
CDEL has been penalised ₹10 lakh. Ms Hegde, Mr Ranganath and Mr Mohan have each been fined ₹5 lakh. Dr Vasundhara Devi, Mr Ravish and Mr Devnu have been levied a penalty of ₹3 lakh each, while Ram Mohan has been fined ₹2 lakh. Mr Hieronimus and Mr Poojary have been imposed a penalty of ₹1 lakh each.
