Devyani International Limited has received observation letters from the National Stock Exchange of India (NSE) and BSE regarding its proposed composite scheme of arrangement with Sapphire Foods India Limited. NSE issued a letter with 'no objection', while BSE conveyed 'no adverse observations', allowing the companies to proceed with filing the draft scheme before the National Company Law Tribunal (NCLT). The scheme, approved by the Board of Directors on January 1, 2026, remains subject to necessary statutory and regulatory approvals, including those from the Competition Commission of India (CCI), as well as shareholder confirmation.

The exchanges outlined specific conditions for the companies to ensure compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Both NSE and BSE emphasized that the proposed scheme must be expressly subject to the receipt of CCI approval before it is filed with the NCLT. Additionally, the companies are required to disclose all details of ongoing adjudication, recovery proceedings, prosecutions, and enforcement actions against Sapphire Foods India, Devyani International, their promoters, and directors before the NCLT and shareholders.

Regulatory Conditions and Disclosures

The observation letters mandate comprehensive disclosures to assist shareholders in making informed decisions. The companies must provide a simple explanation of the scheme, its rationale, and a detailed analysis of its impact on shareholders, including any dilution or change in rights. A cost-benefit analysis outlining anticipated benefits versus associated costs is also required. Furthermore, the latest financials of both entities, not older than six months from the date of the stock exchange's No Objection Certificate (NOC), must be hosted on the companies' websites and included in the explanatory statement.

Shareholding and Secondary Sale Details

The exchanges specifically called for the disclosure of details regarding the SFIL Secondary Sale, involving the sale of up to 5,94,55,837 equity shares of Sapphire Foods, representing up to 18.5% of its share capital as of December 31, 2025. This transaction involves Sapphire Foods Mauritius Limited selling shares to Arctic International Limited. The companies must also disclose any promoters or promoter group entities intending to be reclassified in the public category in Devyani International, along with the reasons for such reclassification.

Validity and Next Steps

The validity of the observation letters is six months from June 12, 2026, within which period the scheme must be submitted to the NCLT. Both exchanges reserved the right to raise objections or withdraw their observations if any information submitted is found to be incomplete, incorrect, misleading, or false. The companies are obligated to incorporate the observations of SEBI and the stock exchanges into the petition filed before the NCLT and to bring these observations to the notice of the tribunal.

Devyani International Limited announced that its wholly-owned subsidiary, Sky Gate Hospitality Private Limited, has successfully quashed an Income Tax demand of INR 59.52 million. The demand, which was issued under section 143(3) of the Income-tax Act, 1961 for the Assessment Year 2024-25, was withdrawn by the Deputy Commissioner of Income Tax through a rectification order dated June 9, 2026. The development removes a financial liability related to the alleged excess premium on share issuance during the financial year 2023-24.

The company had previously informed the exchanges on March 25, 2026 that Sky Gate Hospitality had received the demand order. The tax authority had contested the premium on shares issued by the subsidiary during FY24. Following the receipt of the demand, Sky Gate filed a rectification application under section 154 of the Income-tax Act, 1961 to challenge the assessment.

The Deputy Commissioner of Income Tax accepted the submissions made by Sky Gate Hospitality, leading to the quashing of the earlier demand order. The intimation regarding the rectification was received by the subsidiary on June 10, 2026. The disclosure was made to the exchanges in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Key Details of the Tax Demand

The resolution of this tax dispute eliminates the contingent liability for Sky Gate Hospitality and Devyani International . The company confirmed that the necessary disclosures regarding the rectification have been submitted to the National Stock Exchange of India Ltd. and BSE Limited.