3.11 Provisions and contingent liabilities
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow
of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating
losses.
Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the
economic benefits expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefits
will be required to settle a present obligation as a result of an obligating event based on a reliable estimate of such obligation.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the
class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class
of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end
of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest
expense.
The disclosure of contingent liability is made when, as a result of obligating events, there is a possible obligation or a present obligation that may,
but probably will not, require an outflow of resources.
3.12 Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
3.13 Cash flow statement
Cash flows are reported using the indirect method, whereby net profit/ (loss) before tax is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities
of the Company are segregated.
3.14 Earnings per share
The basic earnings per share is computed by dividing the net profit/ (loss) attributable to owner's of the Company for the year by the weighted
average number of equity shares outstanding during reporting period.
There are no potential dilutive equity shares with the Company.
3.15 Contributed equity
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Annual Rsnort 9094-95
Information about the Company’s exposure to interest rate and liquidity risks is included in note 35
Notes:
(i) Secured, unlisted , redeemable non-convertible debentures issued to Credit Opportunities II Pte. Ltd. and India Special Situations Scheme I
n As at the year end, the paid up value of these debentures is ? 2,000 [31 March 2024: ? 2,000 secured redeemable non convertible debentures of ?1
million each]
n Security
-Pledge of shares of CDGL where the aggregate amount shall be 2.5 times the benchmark amount.
n Personal guarantee of Late Mr. V. G. Siddhartha.
n 9.5% per year, payable quarterly and interest of 4% compounding quarterly
n Initial security cover ratio: 2.25x from CDGL shares and an additional 0.25x from CDEL shares within 45 days ("Initial Collateral Package"). Promoter
shall have the right to alter the collateral to 1.00x cover from CDGL shares and an additional 1.00x cover from CDEL shares.
n The amount shall be paid on bullet repayment basis at the end of year three, 31 March 2022.
n During the FY 2020-21,the lender has recalled the entire amount outstanding
n The lenders of the company has filed an application with NCLT, Bangalore for recovery of its dues and NCLT, Bangalore vide order dated 8 August
2024 has admitted the company to Corporate Insolvency Resolution Process(CIRP). The Company has applead against the NLCT, Bangalore order dated 8
August 2024 before NCLAT, Chennai and NCLAT, Chennai vide its order dated 14 August 2024, has stayed the operation of the impugned order passed
by NCLT, Bangalore. Further, Lender approached Supreme Court, and the matter was listed on 31st January 2025 wherein the Supreme Court has
directed the concerned NCLAT, Chennai to dispose of the appeal pending before it on or before 21.02.2025. In the event the appeal is not disposed of
by then, the impugned order passed by the Appellate Tribunal shall stand vacated automatically. On 27.02.2025 NCLAT has allowed the appeal filed by
the company.
Company has entered into settlement agreement with Credit opportunities India Pte Ltd and India Special situations Scheme-I (debenture holders of the
company) to settle the loan at ? 2,050 millions in three tranches which includes the amount realized on sale of 12.41% of the pledged and invoked
shares of Coffee Day Global Limited owned by the Company, by the lender to a third party for ? 550 millions on April 9, 2025. Debenture holders have
waived the interest till date. The Company has paid ? 250 millions on April 9, 2025 as first tranche as agreed in the settlement agreement.
(ii) From Axis Bank Limited [Principal amount of loan amounting to ? 1,087.79 million (31 March 2024 - ? 1,104.78 million) - Secured by
n Security
- Listed shares of Sical Logistics Ltd. / Lakshmi Vilas Bank/ CDEL/ any other listed entity acceptable to the lender (65% of total security cover), held by
promoter/ group covering 120% of exposure.
- Personal guarantee of Late Mr. V G Siddhartha
- Security cover by way of listed shares of at least 1.2x of the outstanding/ disbursed facility amount to be maintained during the tenor of the loan on
MTM basis.
n The interest rate for the loan is as follows:
- 1 year MCLR 1% (Spread) p.a, payable monthly (First three years)
- 1 year MCLR 1.75% (Spread) p.a, payable monthly (subject to minimum effective rate of interest of 10.65% p.a) (Post three years)
n The lender can exercise the call option at the end of three years
n The Company has an option of voluntary prepayment with no penalty
n The loan amount shall be repaid in 4 half yearly instalments beginning from 42nd month of first disbursement (i.e., 28 June 2020)
n The loan has been outstanding for 39 months from the due date.
n Amounts unpaid on due date will attract overdue interest at 2% p.a
n Due to default in repayment of interest and principal. In view pending onetime settlement with the lenders, the management has not recognised
interest of Rs. 118 millions for the period 1 April 2023 to 31 March 2024.
n The Company’s borrowing from Axis Bank has been guaranteed by our subsidiary Coffee Day Global Ltd (CDGL). Pursuant to invoking of the
guarantee, the loan has devolved on CDGL. This has been factored in the Proposed Restructuring Plan of CDGL. As per restructuring plan CDGL has paid
? 68.3 millions for FY 24-25 to Axis Bank @8.5% p.a.
Notes to the financial statements (continued)
(iii) From Rare Asset Reconstruction Limited (Rare ARC)- ? 478.82 million [31 March 2024: Principal amount of loan amounting to ? 792.22 million
including current maturities of long-term borrowings - Secured by
n Security
- Pledge of a proportion of the shares of Mindtree Limited (released during the year), Coffee Day Global Limited, Sical Logistics Limited held by the
Company;
- Personal guarantee of Late Mr. V. G. Siddhartha
n The loan carries an interest rate of 15.00% p.a. payable quarterly
n Any delay in repayment of interest entails payment of penal interest @ 24% p.a. for the period of delay.
n The Company has an option of voluntary prepayment under certain circumstances as set out in the arrangement. Further, the Company has an option
to repay the loan in advance with a prepayment premium of 2% on the principal amount outstanding as on the date of prepayment.
°The repayment of the loan has been extended pursuant to the letter dated 24 September 2020 up to 31 March 2021 and During the FY 2021 -22,the
lender has recalled the entire amount outstanding amount and also initiated legal disputes.
n The loan has been outstanding for 48 months from the due date
n Due to default in repayment of interest and principal. In view of the loan recall notices, legal disputes and pending onetime settlement with the
lenders, the management has not recognised interest of ? 93.03 millions for the period 1 April 2023 to 31 March 2024.
n Aditya Birla Finance Limited assigned its debt as per the provisions of SARFAESI Act, in favour of Rare Asset Reconstruction Limited along with all the
underlying securities, rights, title and interest through an Registered Assignment Agreement dated March 31, 2023
(iv) From Kemfin Services Private Ltd- ? 250 million [31 March 2024: ? 250 million]
n Security - Nil
n- Personal guarantee of Late Mr.V. G. Siddhartha
n The loan carries an interest rate of 15.00% p.a. payable monthly
n Any delay in repayment of interest entails payment of penal interest @ 24% p.a. for the period of delay.
°The repayment of the loan has been extended pursuant to the letter dated 09 Dec 2021 up to 9 December 2022.
°The loan has been outstanding for 27 months from the due date
n The Company has not paid the monthly interest from July 2019 to the extent of ? 97.20 millions included the carrying amount
n In view of the pending onetime settlement with the lenders, the management has not recognised interest of ? 37.60 millions for the period 1 April
2023 to 31 March 2024
i) Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of
cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending
with various forums/authorities.
ii) The Company has reviewed all its pending litigations and proceedings and has adequately provided for where
provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. Based on
the advice from the Company's legal counsel, management does not expect the outcome of these proceedings to have
a materially adverse effect on its financial position. The Company does not expect any reimbursements in respect of
the above contingent liabilities.
iii) The company has received the demand of ? 56.93 million during the year in respect of AY 2011-12 pursuant to the
re-assessment u/s 143(3) rws 147. the company had filed appeal in CIT (Appeals)for the above said order and the
same disposed in company favor on 22 February 2024. Income Tax Department went for an appeal before ITAT
against the order passed by CIT(Appeals). ITAT has dismissed the appeal filed by the Income Tax Department.
iv) The Supreme court of India in the month of February 2019 had passed a judgement relating to definition of wages
under the Provident Fund Act, 1952. However, considering that there are numerous interpretative issues relating to
this judgement and in the absence of reliable measurement of the provision for the earlier periods, the Company will
evaluate its position and update its provision, if required, on receiving further clarity on the subject. The Company
does not expect any material impact of the same.
(v) The Company has pledged its investmenents in subsidiaries for the loans availed by its subsidaries. All the shares
pledged are invoked by the lenders and the effect to the invokation has alreeady been given in the financial
statements. Refer note 6.
28 .Company has given 26,36,000 shares held in Coffee Day Global Limited as security for the loan availed by M/s Sical
Logistics Limited from RBL bank limited. During FY 23-24, RBL bank has sold the above security given by the
company and adjusted the proceeds against the dues of M/s Sical Logistics Limited and company has recognised a
loss of Rs.240.04 millions from the above sale transaction shown as exceptional item.
31 Leases
Effective 1 April 2019, the company adopted Ind AS 116 “Leases” and applied to all lease contracts existing on 1
April 2019 using the modified retrospective method and has taken the cumulative adjustment to retained earnings, on
the date of initial application.
Consequently, the company recorded the lease liability at the present value of the lease payments discounted at the
incremental borrow'ng rate and the right of use asset at its carrying amount as if the standard had been applied since
the commencement date of the lease, but discounted at the lessee’s incremental borrow'ng rate at the date of initial
application.
The company's lease assets primarliy consists of leases for land and buildings. The company has recognised right-of-
use assets and lease liability in respect of these leases on adoption of Ind AS 116. The lease liability is secured by the
respective security deposits. The lease liability terms varies between 2 to 20 years, and are payable in monthly
installments.
The weighted average incremental borrow'ng rate applied to lease liabilities as at 1 April 2019 is 12.50%.
Effects on adoption of Ind AS 116:
i) On transition, the adoption of the new standard resulted in recognition of 'Right of Use asset' of ? 22.42 Million,
and a lease liability of ? 45.34 Millions. The cumulative effect of applying the standard of was adjusted w'th opening
balance of retained earnings. The effect of this adoption is insignificant on the profit before tax, profit for the
period and earnings per share. Ind AS116 will result in decrease in cash out flows from operating activities and an
increase in cash out flows from financing activities on account of lease payments.
ii) On pre-mature termination of lease contract the related right-of-use asset and lease liability is de-recognised and
the differential amount is recognised in profit and loss acccount.
iii) Rental expenses recognised in Profit & Loss statement, in respect of low value leases and shortterm leases, for
which Ind AS 116 has not been applied, is ? 0.86 Million (Previous year ? 0.66 million)
35 Financial instruments - fair values and risk management (continued)
The Company has not disclosed the fair values for financial instruments for loans (current and non current), other financial assets (current and non current) , trade receivables, cash and cash equivalents and bank balances other than
cash and cash equivalents, Trade payables, other financial liabilities (current and non current) because their carrying amounts are reasonably approximation of fair value. Investment in equity shares are not appearing as financial asset
in the table above being investment in subsidiaries accounted under Ind AS 27, Separate Financial Statements is scoped out under Ind AS 109.
Fair value hierarchy
Fair value hierarchy explains the judgement and estimates made in determining the fair values of the financial instruments that are¬
a) recognised and measured at fair value
b) measured at amortised cost and for which fair values are disclosed in the financial statements.
To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each
level follows underneath the table:
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments
(including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market
data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included
in level 3
B Measurement of fair values
(i) Valuation techniques and significant unobservable inputs
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following
methods and assumptions were used to estimate the fair values:
- The fair values of the Company's interest-bearing debentures and loans are determined by using DCF method using discount rate that reflects the issuer's borrowing rate as at the end of the reporting period. The own non¬
performance risk as at 31 March 2025 was assessed to be insignificant.
The following tables show the valuation techniques used in measuring Level 2 fair values. The significant unobservable inputs used have not been disclosed as no financial assets and liabilities have been measured at fair value:
C Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- credit risk (see (b));
- liquidity risk (see (c)); and
- market risk (see (d)).
(a) Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk management policies are established to identify and analyse the risks
faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's
activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
Board oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. Board is
assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
(b) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's
receivables from customers; loans and investments in debt securities.
The carrying amounts of financial assets represent the maximum credit risk exposure.
i) Trade receivables and loans:
The Company's trade receivable primarily includes receivables from related parties and others from Customers. The Company has established a credit policy under which each new customer is analysed individually for
creditworthiness before the Company's standard payment and delivery terms and conditions are offered. The Company's review includes external ratings, if they are available, financial statements, credit agency information, industry
information and in some cases bank references.
The Company's loans include recoverable from loans given to wholly owned subsidiaries
The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a
significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive
forwarding-looking information.
Based on the above analysis, the Company does not expect any credit risk from its trade receivables and loans recoverable for any of the years reported in this financial statements.
38 These standalone financial statements for the year ended 31 March 2025 have been prepared on a going concern basis in view of the positive net worth of the Company amounting to ?.16,171 million as of 31 March 2025.
39 SEBI issued an order dated 24 January 2023 directing CDEL in the matter of transfer of funds by Subsidiaries of the Company to Mysore Amalgamated Coffee Estates Limited to take all the necessary steps for recovery of entire dues
from MACEL and its related entities along with due interest, that are outstanding to the subsidiaries of CDEL. Further, SEBI has directed the Company to appoint an Independent Law firm in consultation with NSE within 60 days of this
order, to take effective steps for recovery of dues and imposed a penalty of ? 250 million under section 15HA and ? 10 million under section 15HB of the SEBI Act, 1992.
Thereafter, the company appealed the above order dated 24 January 2023 to the Hon'ble Securities Appellate Tribunal (SAT). However, the SAT granted stay on imposition of penalty.
As per the instructions of NSE the Company appointed Independent Law Firm Crest Law on 3 April 2023 to take effective steps for recovery of dues from MACEL. Company has initiated arbitration proccedings against MACEL as
suggested by Crest Law in consultation with NSE. In this regard the subsidiaries of the company has filed claim statement as part of arbitration proceedings.
As per our report of even date attached
for Venkatesh & Co for and on behalf of the Board of Directors of
Chartered Accountants Coffee Day Enterprises Limited
Firm registration number: 004636S
Sd- Sd- Sd-
CA Hrishikesh D Malavika Hegde K R Mohan
Partner Director Director
Membership no.: 272865 DIN: 00136524 DIN: 01718628
Place: Bangalore
Date: 29 May 2025 Sd- Sd¬
R Ram Mohan Sadananda Poojary
UDIN: 25272865BMLLAE8016 Chief Financial Officer Company Secretary
Place: Bangalore Place: Bangalore
Date: 29 May 2025 Date: 29 May 2025
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