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BENGALURU: The auditor of Coffee Day Enterprises (CDEL), which runs the Cafe Coffee Day chain, has resigned saying it does not have enough information to do a proper audit.
BSR & Associates, an affiliate of KPMG, said the numbers provided by subsidiaries of CDEL were not enough to base its opinion on the accounts presented by the management. BSR was appointed in 2018 for five years.
The auditor said that the financial statements for the first quarter ended June 30, 2019, was on a going concern basis, but based on the “overall position we are unable to comment on whether the going concern basis for preparation of the statement is appropriate.”
Coffee Day’s management has compiled results for the past few quarters, but these are not audited yet. This fiscal’s first quarter numbers were reported last week, which saw revenue dropping by about 30% to Rs 927 crore. Profit surged to Rs 1,618 crore due to the one-off gain made by the stake sale in group company Mindtree.
BSR also said that since the investigation into the letter signed by late founder VG Siddhartha was yet to conclude, it was unable to verify if there are any adjustments or disclosures required to be made to the statement. CDEL said it has nothing to add to what has been filed on the stock exchange. The company has replaced BSR with Sundaresha & Associates for five years.
Siddhartha’s letter had drawn widespread attention last year as it referred to his inability to tackle the burgeoning debt of the company and withstand pressure from investors. The letter also stated that the management and auditors were unaware of all his transactions.
The BSR report also highlighted that the holding company has several subsidiaries which in turn have many other auditors and BSR did not receive adequate responses from them.