A team of EY has taken over all the functions that a chief financial officer is expected to undertake, including managing financials and monitoring cash flows of the company, people privy to the development told ET.
Mumbai: Coffee Day Enterprises, parent company of coffee chain Cafe Coffee Day, has roped in EY India to handle its CFO functions in a display of transparency, possibly intended to dispel any doubts in the minds of potential buyers of its business.
A team of EY has taken over all the functions that a chief financial officer is expected to undertake, including managing financials and monitoring cash flows of the company, people privy to the development told ET.
The development comes at a time when the debt-laden CDEL is looking to restart the bidding process for its entire business.
Many potential buyers have been treading cautiously following allegations of corporate governance issues at the company, people in the know said.
EY is expected to raise red flag if it notices any discrepancies in the day to day dealings of the company, they said.
EY did not respond to ET’s queries as of press time Tuesday. “As disclosed earlier, the board of CDEL voluntarily appointed EY for business support functions and vendor due diligence. The aim is to improve systems and processes resulting in better efficiencies,” a CDEL spokesperson said.
In March this year, CDEL said it has repaid Rs 1,644 crore to 13 of its lenders after it sold its technology business park to Blackstone. With this, the firm’s total debt came down to Rs 3200 crore.
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The company board is expected to speed up talks with interested investors once former Central Bureau of Investigation (CBI) official Ashok Kumar Malhotra submits his investigation report about a letter CCD founder V G Siddhartha wrote to the company board before he went missing on July 29 last year, people in the know said.
Siddhartha was found dead on July 31. He purportedly wrote a letter to the company board on July 27.
While there is no timeline for submitting the investigation report, many expect this could happen in the coming weeks.
Last week BSR & Co, part of KPMG India, had resigned as the auditor of CDEL, citing “commercial considerations.”
The auditor had raised questions around the quarterly numbers, citing lack of evidence. BSR had also observed that the outcome of the investigation into Siddhartha’s purported letter could also have a substantial impact on the numbers.
According to people cited earlier, many potential buyers, including private equity investors and strategic investors, have expressed interest in CDEL business, but they are waiting for the forensic report.
“Investors would want clarity on the numbers and certainly don’t want to deal with any investigation by any Indian regulator in the future,” said a person representing one of the potential buyers. “The report is crucial.”
CDEL has also asked EY to conduct due diligence of potential buyers whenever the investment cycle begins.
In the past, about two dozen investors including KKR, TPG Capital, Oyo, Apax Partners and Bain Capital had shown interest in buying the coffee chain.
Some of them were only interested in buying the CCD brand, while others wanted some of the other functions of existing operations, people in the know said.
