VG Siddhartha Death: Coffee Day’s Debt Doubled To Over Rs 5,200 Crore In 2018-19, Filings Show
VG Siddhartha is the founder of Coffee Day Enterprises, which runs the Cafe Coffee Day chain of coffee shops in India. (Photographer: Dhiraj Singh/Bloomberg)

VG Siddhartha Death: Coffee Day’s Debt Doubled To Over Rs 5,200 Crore In 2018-19, Filings Show


VG Siddhartha's flagship company Coffee Day Enterprises Ltd. had seen its current liabilities double to over Rs 5,200 crore in 2018-19, while his unlisted ventures in realty and hospitality sector may have similar levels of debt, according to regulatory filings with the stock exchanges and the corporate affairs ministry.

Siddhartha and promoter group entities had also pledged three quarters of their stake in Coffee Day Enterprises to financial institutions. The Cafe Coffee Day founder had pledged additional shares as recently as June this year.

Siddhartha was pulled out dead from a river in Karnataka on Wednesday, 36 hours after he went missing. He was cremated at his estate in Chikmagalur on the same day.

In an unverified letter that surfaced after he went missing, Siddhartha cited pressure from banks, investors and tax authorities.

"I would like to say I gave it my all. I am sorry to let down all the people that put their trust in me. I fought for a long time but today, I gave up as I could not take any more pressure from one of the private equity partners forcing me to buy back shares, a transaction I had partially completed six months ago by borrowing a large sum of money from a friend," Siddhartha purportedly wrote in the letter.

According to filings with the BSE, Coffee Day Enterprises had debt of Rs 5,251 crore as on March 31, up from Rs 2,457.3 crore a year ago. Its promoter firms, Devadarshini Info Technologies, Coffee Day Consolidations, Gonibedu Coffee Estates and Sivan Securities, had also borrowed heavily from time to time.

A series of filings to the corporate affairs ministry showed that Siddhartha had taken loans of as little as Rs 12 crore, and had borrowings from institutions such as Tata Capital Financial Services Ltd., Clix Capital Services (formerly GE Money Finance Services) and Shapoorji Pallonji Finance.

One such filing from April 2018 shows that Shapoorji Pallonji Finance had in principle agreed to "provide financial assistance by way of loan against securities facility not exceeding Rs 12 crore..." to Tanglin Developments Ltd., a subsidiary of Coffee Day.

Another document mentions a loan agreement for Coffee Day Hotels and Resorts, where Clix Capital had agreed "to provide a term loan facility for an aggregate principal amount of up to Rs 1 lakh".

Coffee Day Consolidations had short-term borrowings and current liabilities of Rs 36.53 crore as of March 31, 2018, another filing showed.

While the exact quantum of the borrowings by Siddhartha’s unlisted companies couldn’t immediately be ascertained, the total as indicated by the filings would be in addition to the amount Coffee Day Enterprises owes to lenders.

Siddhartha's borrowings appear to have intensified after 2017, but there is no information on how much of it remains unpaid.

Also read: VG Siddhartha: Trapped By Debt

According to the latest available shareholding pattern, Siddhartha held 32.7 percent stake in Coffee Day Enterprise while his wife Malavika Hegde owned 4.05 percent. Four other promoter group companies—Devadarshini Info Technologies, Coffee Day Consolidations, Gonibedu Coffee Estates and Sivan Securities—held a little over 17 percent stake in Coffee Day Enterprise, as on June 30.

This brought their combined holding in the company to 53.93 percent.

The promoter entities had pledged as much as 75.7 percent, or 8.62 crore shares, of their total holding in the company, with Siddhartha creating a fresh pledge of 1.39 percent, or 29.2 lakh shares, as recently as the end of June.

Also read: The VG Siddhartha Whodunit

The shares were peldged to Kotak Mahindra Bank against borrowings from Kotak Mahindra Investments Ltd, "in connection with the borrowings availed by group companies".

While Sivan Securities pledged almost all of its shares in the company, Coffee Day Consolidations, Devadarshini Info Technologies and Gonibedu Coffee Estates pledged 9.5.96 percent, 83.07 percent and 78.90 percent of their stakes in the company, the filings showed.

Coffee Day Enterprises is yet to announce its June quarter results. It has informed the exchanges that its board would meet on Aug. 8 to consider and approve standalone and consolidated results for the April-June period.

Also read: The Death of India’s Coffee King Should Be a Lesson

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