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IDBI Trusteeship has filed for insolvency proceedings against Coffee Day Enterprises for an alleged default of INR 228 crore, with IndusInd Bank also seeking insolvency proceedings over a default of INR 94 crore.
The issue relates to the diversion of funds worth Rs 3,535 crore from seven subsidiaries of CDEL to Mysore Amalgamated Coffee Estate Ltd (MACEL). MACEL is owned and controlled by the promoters of CDEL.
The National Financial Reporting Authority (NFRA) has fined three entities, including two individual auditors, a total of Rs 1.10 crore for auditing lapses in Tanglin Developments Ltd (TDL), a subsidiary of Coffee Day Enterprises Ltd. The auditing firm, Sundaresha & Associates, and the two auditors, C Ramesh and Chaitanya G Deshpande, have been barred from taking up auditing work for different periods.
NFRA said its investigations revealed the "auditors failed to exercise professional judgement and scepticism during the audit of TDL where borrowings of ₹2,027.46 crore was used in fraudulent diversion of funds to MACEL worth ₹2,073.23 crore through its group entities, given without any business rationale or agreement and the money ultimately moved to promoters entity MACEL".
The National Financial Reporting Authority has imposed a ban and penalties totalling ₹1.10 cr on three entities, including two auditors, for alleged professional lapses in the auditing of Giri Vidhyuth (India), a subsidiary of Coffee Day Enterprises, for 2019-20.