Coffee Day Enterprises Ltd, which primarily manages cafe chain outlets under the Cafe Coffee Day (CCD) brand, is experiencing financial difficulties and is in the news for rumoured bankruptcy.
Since the death of VG Siddhartha, the founder of Coffee Day Enterprises, the company has encountered difficulties. Siddhartha committed suicide in 2019 while the company was drowning in debt.
Since then, a number of measures have been made by the group to control its debt and turn the company profitable. But Coffee Day’s return to fame could be hampered by the rumoured bankruptcy procedures.
Lets take a look at some of the key reasons for how Coffee Day Enterprises’ peak moments have turned challenging in the recent times;
Coffee Day Global NCLT episode
On Monday, July 24, according to a regulatory filing by Coffee Day Enterprises, parent company of Coffee Day Global, the Bengaluru bench of the National Company Law Tribunal (NCLT) passed an order over a plea brought by a financial creditor of the business who sought payment of ₹94 crore in unpaid debts.
“The application filed by one of the lenders against the material subsidiary Coffee Day Global before NCLT, Bengaluru, has been admitted (oral order) under Section 7 of Insolvency and Bankruptcy Code, 2016 for initiating CIRP for ₹94 crore,” the regulatory filing stated.
IndusInd Bank petitioned the NCLT, according to a report by Economic Times, and as a result, the coffee chain is now subject to insolvency proceedings. Coffee Day Global is a subsidiary of Coffee Day Enterprises, which owns 82% of it.
Coffee Day Global is awaiting a formal order from the NCLT, according to the firm’s exchange filing, and the material subsidiary has told the company that it will pursue the necessary legal action in this regard.
Skanda Legal and Tatva Legal are the respective legal representatives for the applicant and respondent, according to the official order issued by NCLT.
On Monday, following this news Coffee Day share price was among the major laggards in the bourses down over 19%.
“This challenging situation, while difficult in the short term, could potentially offer a lifeline to the company by enabling it to shed non-performing assets, restructure debt, and focus on profitable areas. The future of Cafe Coffee Day, thus, hinges on effective crisis navigation, with potential outcomes ranging from successful business revitalisation to eventual liquidation if a feasible resolution plan does not emerge from the proceedings,” said Sonam Chandwani, Managing Partner KS Legal & Associates.
Coffee Day SEBI episode
The capital markets regulator Securities and Exchange Board of India (SEBI) assessed the company a fine of ₹26 crore in January 2023. The penalty was levied because the proceeds from subsidiaries was diverted to a business connected to the promoters. In its 43-page judgement, Sebi determined that funds worth 3,535 crore were diverted from seven subsidiaries of Coffee Day Enterprises to Mysore Amalgamated Coffee Estates Ltd, a company connected to Coffee Day Enterprises proprietors.
For the quarter that ended March 31 (Q4FY23) parent company, Coffee Day Enterprises net profit after taxes slumped 36% year-on-year (YoY) to ₹33 crores, and revenue jumped 42% on year to ₹240 crore. For FY23, the company reported a net loss after tax at ₹380 crores versus 121 crores YoY.
Coffee Day Q4 Results 2023
Coffee Day Enterprises, arm Coffee Day Global’s net revenue for Q4FY23 grew 54% year-on-year to ₹230 crores. According to the company’s exchange filing, average sales per day was ₹20,899 for Q4FY23, and same store sales growth was 27.3%. The cafe outlets counts during Q4FY23 was down from 495 a year ago to 469. However, in Q4FY23, the vending machines count increase to 49,895 from 45,217 a year ago.
Cafe coffee day : the brand that refuse to die | Mint Explains
Coffee Day Stock News
After Chairman V G Siddhartha, the company’s founder, passed away in July 2019, Coffee Day Enterprises is in jeopardy. Through asset resolutions, it is reducing its obligations to a far less extent than when the problems first began.
Coffee Day Enterprises said in March 2020 that it had reached an agreement with Blackstone Group to sell its technology business park, and that it would be paying ₹1,644 crore to 13 lenders as a result.
Coffee Day share price has decreased by 66.5% since V G Siddhartha passed away on July 29, 2019.
On November 2, 2015, Coffee Day share price listed on the Indian stock exchange at a price of ₹271 per share, 26.35% below the issue price of ₹328. The company raised ₹1,150 crore from IPO.
Coffee Day audit lapses: NFRA slaps ₹1.10 cr fine, ban on 2 auditors, 1 audit firm
On Thursday, July 27, Coffee Day Enterprises share price closed flat at ₹33.30 on NSE.
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