“The investigation report will be submitted to the board tomorrow. Once the investigation report is out, all the figures will come out and whatever provisions have to be made, will be made,” said sources familiar with the development.
In August last year, CDEL had asked Ashok Kumar Malhotra, retired DIG of the Central Bureau of Investigation
to investigate the purported letter written by founder chairman of the company V G Siddhartha before his untimely demise. The investigative team is taking the help of an accounting firm to scrutinise the books of accounts.
“According to the Sebi deadline, we have to complete everything by July 31,” another person said. Earlier, the company had roped in EY India to discharge the CFO (chief financial officer) functions in its bid to give confidence to prospective buyers.
“CFO is still there, but the transaction will be overseen by EY, so that will give confidence to prospective investor,” sources said.
An official of CDEL declined to respond to Business Standard's queries.
Meanwhile, some media reports have suggested that around Rs 4,000 crore of transactions remained untraced in the books, which would be part of the investigation report. However, sources said the extent of lapse, if any, would only be known after submission of the report.
The coffee chain, which had closed 280 outlets in the first quarter of current financial year, will also look at other optimisation moves in its board meet.
On the recent resignation of BSR & Associates as the auditor
of the company, sources said there were differences of opinion between the management and the auditors on several issues, including valuation of subsidiaries.
“Despite the amendment of corporate tax norms with retrospective effect, the auditor
said CDEL should pay the tax liability first and reimburse it later. But, the stand of management was when the government had said retrospectively, there was no need to pay it,” said a source familiar with the functioning of the company.
Similarly, auditors asked for valuation certificate of a certain subsidiary, which the management was not able to produce due to the Covid-19 related disruption. “Also, when the external auditor, which is an independent authority, certifies the transactions that are under investigation, the investigator may take objection to it,” said another person.
Last week, BSR & Associates at the time of resigning from the company, said that the holding company had several subsidiaries which in turn have many other auditors, and that it did not receive adequate clarifications and responses from these auditors.
It also said that it did not receive evidence with respect to debt covenants, details of defaults in repayment and if lenders had taken any action or changed any loan agreements.