Coffee Day Enterprises auditors give no results conclusion

Coffee Day Enterprises Limited’s auditors gave no conclusion on its consolidated results for the half year ended 30 September 2026, saying they lacked sufficient evidence on Rs 3,357.13 crore due from Mysore Amalgamated Coffee Estates Limited, lender balances and matters that could affect the group’s going-concern assumption.

Why did Coffee Day Enterprises receive no conclusion on its results?

Coffee Day Enterprises received no conclusion because Venkatesh & Co. said it could not obtain sufficient evidence to provide a basis for a conclusion on the consolidated financial results for the quarter and half year ended 30 September 2026. The firm said a limited review under Standard on Review Engagement 2410 is narrower than an audit, but the matters in its disclaimer prevented it from expressing any conclusion on the statement.

The principal issue was the recoverability of amounts due from Mysore Amalgamated Coffee Estates Limited, referred to as MACEL. The auditors said three subsidiaries and two step-down subsidiaries had also received disclaimers of conclusion because of the possible effect of MACEL recoverability. Amounts due from MACEL to the group and joint venture totalled Rs 3,357.13 crore, and no provision had been recorded against those receivables.

The audit report also noted that another subsidiary’s auditor had issued a disclaimer of conclusion relating to MACEL dues. The auditors said Coffee Day Enterprises had not demonstrated conclusive evidence supporting recovery, so they could not comment on whether a provision was required or on the consequential effect on results for the six months ended 30 September 2026.

What is the status of Coffee Day Enterprises’ MACEL recovery action?

Coffee Day Enterprises said its subsidiaries had filed claim statements in arbitration proceedings against MACEL after the company appointed independent law firm Crest Law on 3 April 2023, following National Stock Exchange of India instructions. The filing does not state a hearing date, recovery amount from arbitration, or timetable for resolution of the Rs 3,357.13 crore receivable issue.

The company had appealed the Securities and Exchange Board of India order dated 24 January 2023, which had directed recovery action over subsidiary advances to MACEL and related entities. Coffee Day Enterprises said the Securities Appellate Tribunal disposed of the appeal on 5 November 2026 and set aside the 24 January 2023 order; management said it was evaluating the appropriate course of action.

The 2023 order had imposed penalties of Rs 25 crore under Section 15HA and Rs 1 crore under Section 15HB of the Securities and Exchange Board of India Act, 1992. The filing says the Securities Appellate Tribunal had previously stayed imposition of the penalties, while the subsequent 5 November 2026 order set aside the earlier order.

Which lender balances and defaults could not be verified?

The auditors could not verify certain lender obligations because Coffee Day Enterprises and some subsidiaries had debt-covenant non-compliances, including interest and principal repayment defaults. They said certain lenders had exercised their right to recall loans in prior years and that, without adequate evidence, they could not assess the correctness of reported loan amounts, consequential effects or potential tax liabilities.

One lender had not provided a balance confirmation for Rs 47.88 crore of loans as of 30 September 2026. Coffee Day Enterprises said management was seeking the confirmation, but the auditors said the lack of sufficient evidence meant they could not establish the relevant amounts payable in the consolidated results.

A subsidiary also had not recognised an invoked financial guarantee of Rs 41.67 crore given to erstwhile subsidiary SICAL. The filing says a restructuring and settlement plan with the lender was proposed, but the auditors could not assess the financial-result impact or compliance with Indian Accounting Standards while that plan remained unexecuted.

Does Coffee Day Enterprises face a going-concern uncertainty?

Yes, the auditors said the identified matters could have consequential implications for Coffee Day Enterprises’ ability to continue as a going concern, although management prepared the consolidated results using that assumption for the half year ended 30 September 2026. The audit report records disclaimers of conclusion in the reports of two subsidiaries and three step-down subsidiaries.

Auditors of one subsidiary and two step-down subsidiaries had also expressed material uncertainty related to going concern. This places management’s use of the going-concern basis alongside auditor concerns over MACEL recoverability, loan defaults and unverified lender balances as of 30 September 2026.

A separate issue involved Rs 275 crore of capital advances in one subsidiary relating to a Mumbai land-purchase agreement. The City and Industrial Development Corporation acquired the land for an international airport and proposed alternative land, but the counterparty filed a legal case seeking monetary compensation instead, leaving auditors unable to comment on recovery of the advance.

What did Coffee Day Enterprises report for September 2026?

Coffee Day Enterprises reported consolidated profit of Rs 40.42 crore for the half year ended 30 September 2026, up from Rs 7.60 crore in the corresponding period a year earlier. The half-year result included Rs 47.44 crore of exceptional items, while profit before exceptional items, equity-accounted investee results and tax was Rs 36 lakh, compared with a loss of Rs 29.84 crore a year earlier.

For the quarter ended 30 September 2026, revenue from operations rose to Rs 298.18 crore from Rs 279.53 crore in the September 2025 quarter. Total income increased to Rs 308.72 crore from Rs 282.58 crore, and the group reported profit of Rs 35.91 crore compared with a loss of Rs 15.70 crore, although the consolidated statement remains subject to the disclaimer of conclusion.

Coffee and related business generated Rs 576.55 crore of segment revenue in the first half of 2026-27, compared with Rs 537.56 crore in the prior-year period. Its earnings before interest, depreciation, amortisation and tax, or EBITDA, rose to Rs 92.09 crore from Rs 72.91 crore, while hospitality services revenue rose to Rs 12.04 crore from Rs 11.61 crore and EBITDA reached Rs 4.06 crore from Rs 3 crore.

Which reporting and restructuring matters remain unresolved?

One subsidiary was undergoing a lender-led corporate restructuring process involving conversion of a foreign-currency loan into rupee loans. The filing says the proposed 8.50% interest rate and conversion require Reserve Bank of India approval, and auditors could not comment on loan-balance completeness or financial-result effects until the restructuring is executed and approvals are received.

Coffee Day Enterprises had not received limited-reviewed financial statements or management-compiled accounts for three joint ventures for the quarter ended 30 September 2026, and those entities were not considered in the statement. Management used the last compiled accounts up to 31 March 2021 for two joint ventures described as inactive after director resignations, while the auditors said they could not comment on associated amounts and disclosures.

The auditors also relied on management-certified results for one subsidiary, three step-down subsidiaries and two partnership firms that together had revenue of Rs 77 lakh, assets of Rs 20.45 crore and total comprehensive income of Rs 28 lakh for the period. Another subsidiary and its two step-down subsidiaries had assets of Rs 262.69 crore and total comprehensive loss of Rs 29 lakh, based on management-certified information.

Conclusion

Coffee Day Enterprises’ reported revenue and profit improved in the half year ended 30 September 2026, with revenue from operations rising by Rs 39.23 crore and reported profit reaching Rs 40.42 crore. However, the auditors did not conclude on the consolidated results because evidence was insufficient on MACEL dues, lender obligations, defaults, a guarantee and other recoverability matters.

The next developments to watch are progress in the MACEL arbitration initiated after Crest Law’s appointment on 3 April 2023, management’s response following the 5 November 2026 Securities Appellate Tribunal order, receipt of lender balance confirmations, and completion of the restructuring requiring Reserve Bank of India approval for foreign-currency-loan conversion.