VG Siddhartha case: Cafe Coffee Day debt had shot up 64% to Rs 6,500 crore in 2018-19; profits had improved

VG Siddhartha founded 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, according to consolidated un-audited results for fiscal 2018-19. Siddhartha went missing on Monday evening under suspicious circumstances. A letter, allegedly written by him, claims he was under pressure over his failure to create a profitable business. However, that's questionable. 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.

He 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. CMIE data says his gross debt stood at Rs 6,547.38 crore as of March 2019. The gross debt had spiked 63.54 per cent from Rs 4,003.47 crore in March 2019, the data adds. For the quarter ending 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.

It is important to note that the annual results of the company for 2017-2018 released last year pegged the gross debt at Rs 5,049 crore. The company is yet to release the figures for 2018-19.

Also read: Cafe Coffee Day founder VG Siddhartha's signature on letter differs from signature on company's annual reports

In his letter, which is being widely circulated on social media, Siddhartha said his intention was never to "cheat or mislead" anyone. Though his signatures in the alleged letter seem slightly different from the one in the company's 2018 annual report, the letter claims Siddhartha as saying he "could not take any more pressure from one of the private equity partners". It is not yet known which private equity partner Siddhartha is talking about.

Coffee Day was profitable, but stiff competition in the market and rising debt had forced Siddhartha to sell his stake in Mindtree for Rs 3,269 crore. In May, infrastructure major L&T purchased around 20 per cent of Siddhartha and Coffee Day's stake in Mindtree through block deal for Rs 3,269 crore. Siddhartha had bought his stake in Mindtree at a price close to Rs 435.79 crore about 8 years back. He sold 2.5 lakh shares at the price of Rs 122.33 in 2012 amounting to Rs 25.52 crore, followed by a minor sale of 250 shares in 2018 at Rs 864 per share, which amounted to Rs 2.16 lakh. After these deductions, the effective cost of investment that VG Siddhartha incurred while buying all his stake in Mindtree comes to around Rs 410.25 crore. The consideration paid by Larson & Toubro to acquire CCD founder's stake as per BSE filing is Rs 3,269 crore.

Also read: Cafe Coffee Day shares slump 20% to hit all-time low after founder VG Siddhartha goes missing

As of December 31, 2018, Coffee Day had total 1,751 outlets across 250 cities of India. Coffee Day's 2018 annual report mentions VG Siddhartha as the Managing Director of Coffee Day Global Limited and Director of Sivan Securities Private Limited, Ittiam Systems Private Limited, and Coffee Dat Resorts Private Limited.

Edited by Manoj Sharma

Also read: CCD owner VG Siddhartha missing: CCD owner's alleged letter says he's 'sorry to let down all the people'