Business Today – August 25, 2019

August 25 I 2019 I BUSINESS TODAY I 31

attached the shares. The shares were later released,

and much to the displeasure of the founders of Mind-

tree, Siddhartha sold his total stake to L&T at ` 980

per share. Post-tax, around `2,100 crore from the sale

was used to service debt. Before this, CDEL had sold

its stake in Global Edge Software for `98 crore.

At a group level, at the end of 2018/19, CDEL had

revenues of `4,264 crore as against `3,788 crore the

previous year. PAT increased to `128 crore from ` 106

crore a year ago. The company is yet to publish its

annual report for 2019, but according to CMIE es-

timates, the total debt for 2018/19 is around `6,547

crore. The company was already in talks with Coca-

Cola and lTC for partnering in the vending business

and even a possible stake sale to further reduce debt.

Even though CDEL’s consolidated debt was

`6,547 crore, the group companies were profitable

individually. For a large corporation with substantial

assets, most analysts still believe that the debt was

manageable even though the free cash flow was nega-

tive. This raises a question over which are the debts

that Siddhartha reportedly refers to. Data collated by

BT shows that CDEL and four of the promoter group

(private) companies had outstanding pledges of

nearly `3,500 crore. Moreover, Siddhartha also stood

as personal guarantor to debts of over `1,000 crore.

There is no clarity on how these funds were used. In

all, the debt may be around `11,000 crore.

In a turn of events that no one had imagined, on

the evening of July 29, Siddhartha went missing from

a bridge across the Netravati river in Mangaluru. His

body was found in the river 36 hours later. In a letter

that he is said to have written, he mentions his over-

all asset valuation at close to `18,000 crore to pay off

all the debts. It also mentions transactions that the

board and others in the management team were not

aware of.

WHAT NEXT FOR COFFEE DAY

ENTERPRISES?

Following the demise of Siddhartha, the board of

CDEL has appointed independent director S.V. Ran-

ganath as the new interim Chairman. The board also

constituted an executive committee comprising Ran-

ganath, Nitin Bagmane as COO, and R. Ram Mohan

as CFO, to exercise the powers of a CEO. Interesting-

ly, CDEL never had a CEO; as CMD, Siddhartha was

carrying out the function of a CEO.

The company released a statement saying the ex-

ecutive committee would look at explore opportuni-

ties to deleverage the Coffee Day Group, and that the

audit committee and executive committee will hold

discussions with the statutory auditors and other

advisors in the next board meeting on August 8, to

probe the transactional details mentioned in the let-

ter. However, market analysts say the company’s top

priority now should be to simplify the organisational

structure. A Mumbai-based analyst, who did not

want to be named, said: “Either consolidating the en-

tities or giving more clarity and data pointers on the

segments will help the company as markets can then

read it better.” Another senior analyst said, “There is

a need to strengthen the management and the board,

and an external CEO from an FMCG or retail back-

ground would make more sense now

Apart from the stake sale in Mindtree, Siddhartha

was also trying to sell a part of his real estate busi-

ness under Tanglin. The company was said to be in

an advanced talks with Blackstone, the world’s largest

asset manager. Global Village, the property on My-

sore Road, is spread over 90 acres and has almost 4.5

million sq. ft built-up area. It is estimated to have an

annual rental cash flow of `250 crore, and a valuation

of around `3,600 crore. Sources in the company say

the new executive committee could look at opening

new channels of communication to close the deal.

Siddhartha was also in talks to sell a substantial

stake in the flagship brand, Café Coffee Day, to Coca-

Cola. Industry analysts point out that after Coca-Cola

bought out Costa Coffee, a stake in Coffee Day Global

would mean a substantial footprint for them in one

of the biggest consumer markets in the world. He

valued Coffee Day Global’s retail business in India at

`7,000-8,000 crore.

For Siddhartha ‘a lot happened over coffee’. For

creating a brand like Café Coffee Day, he will be re-

membered far beyond his tragic death.

With inputs from Anand Adhikari.

Data by Niti Kiran

@rukminirao

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