The Coffee Day Enterprises (CDEL) board has said that it will sell the assets of Coffee Day Group to pare its debt. Founded by VG Siddhartha, CDEL is the parent company of Coffee Day Group which operates the Cafe Coffee Day chain of coffee houses.
The development comes in the wake of Siddhartha's untimely demise, whose body was found at the bank of Netravati river near Hoige Bazaar in Mangalore on Wednesday morning. The CDEL board met later on Wednesday, where it announced that an executive committee will explore the opportunities to deleverage Coffee Day Group.
"Constitution of an executive committee... to exercise the powers previously vested with the Chief Executive Officer of the Company and the Administrative Committee constituted by the Board in 2015. The Board will, in due course, prepare a detailed charter of authorities vested in the Executive Committee and approve the same. The Executive Committee will, inter alia, explore opportunities to deleverage the Coffee Day Group," CDEL said in a stock exchange filing.
The executive committee in charge of deleveraging Coffee Day Group consists of Non-Executive Independent Director SV Ranganath, Chief Operating Officer Nitin Bagmane and Chief Financial Officer R Ram Mohan. In its meeting on Wednesday, the board had also appointed Ranganath as the interim Chairman of the board, and Bagmane as the interim chief operating officer.
In a letter allegedly written by Siddhartha before he went missing, he said that he failed to create the right profitable business model. The purported suicide note further said that the assets of the company outweigh its liabilities and can help repay everybody. A list of assets was attached to the letter.
As per consolidated un-audited results for fiscal 2018-19, Cafe Coffee Day (CCD) - India's largest coffee chain - had total borrowings of Rs 6,547.38 crore as of March 2019, up 64 per cent. However, for the quarter ended December 2018, Coffee Day's consolidated revenue stood at Rs 996.51 crore, while its net profit had also jumped to Rs 73.15 crore from Rs 27.99 crore during the corresponding quarter a year ago. Siddhartha also had cash in hand after selling his shares in IT firm Mindtree for Rs 3,269 crore, raking in a profit of Rs 2,858 crore. This was intended to pare his overall debt.