Cafe Coffee Day's auditor resigns citing “commercial considerations”, questions raised on reported numbers

Mumbai: Coffee Day Enterprise’s auditor, BSR & Associates, has resigned citing “commercial considerations”.

In its last report, the KPMG unit raised questions on the reliability of the numbers reported by the holding company of the Cafe Coffee Day chain.

The auditor said it did not find enough evidence to base its opinion on the accounts presented by the management.


A BSR spokesperson refused to comment on the audit report and its decision to resign, saying: “As a policy, we cannot comment on any client or company-specific matters.”

A Coffee Day spokesperson said its audit committee has recommended the appointment of Sundaresha & Associates in place of BSR.

The company filed BSR’s report along with its first-quarter results announced on Friday. In its observations in the report, BSR said the outcome of an investigation over a letter written by Coffee Day founder VG Siddhartha could change some of the numbers. Siddhartha purportedly wrote the letter to the board on July 27, 2019, two days before he went missing. He was found dead on July 31.

Questions were also raised over the reporting of certain property transactions.

BSR in its report said the holding company has several subsidiaries which in turn have many other auditors, and that it did not receive adequate clarifications and responses from these auditors.

BSR added it did not receive evidence with respect to debt covenants, details of defaults in repayment and if lenders have taken any action or changed any loan agreements.

Thus, the auditor said, it was not in a position to form firm conclusions, especially around debt situations in subsidiaries. It said its role as an auditor is merely to check the numbers provided by the management.

Coffee Day’s board is awaiting a report by former CBI official Ashok Kumar Malhotra, who’s looking into Siddhartha’s letter.

“Pending outcome of the ongoing investigation, we are unable to comment on the completeness, existence, accuracy and appropriateness of the transactions and disclosures of the current quarter and earlier periods, including regulatory non-compliances, if any, and any other consequential impact to the statement,” the auditor said.

The development comes at a time when the company is trying to sell its assets. ET on December 25 reported that private equity firm KKR and Apax Partners were the front runners to buy a significant stake in Café Coffee Day.

The Coffee Day spokesperson said the auditor’s resignation has no impact on the stake sale plans that are currently underway.