Coffee tycoon Siddhartha repaid all loans, had no dues: Tata Capital

Amid talk of financial stress driving founder V G Siddhartha to allegedly end his life, the coffee tycoon had repaid all the loans taken from Tata Capital Financial Services (TCFS) and has no outstanding dues to the entity.

According to TCFS, it had a maximum exposure of Rs 165 crore to Caf Coffee Day (CCD) group in FY2017-18, and that the entire amount had been repaid by March 2019.

"The maximum exposure of TCFS to the CCD group during 2017-18 was Rs 165 crore. In March 2019, TCFS' exposure has completely been repaid," said a company statement emailed to PTI.

Currently, TCFS - a subsidiary of Tata Capital Ltd - has no exposure to Coffee Day Enterprises Ltd (CDEL) or any of the companies within the Cafe Coffee Day group, it added.

CDEL promoter and coffee tycoon V G Siddhartha is said to have been under severe financial stress before his death, with his flagship cafe chain's liabilities doubling to over Rs 5,200 crore by the end of March 2019. His unlisted ventures for realty and hospitality had also availed loans from various entities, as per regulatory filings with the corporate affairs ministry.

Siddhartha, whose body was recovered from a river near Mangalore on Wednesday after going missing on Monday, had struggled with mounting financial burden and a letter purportedly written by him had hinted at his war with "serious liquidity crunch" and "tremendous pressure" from lenders and an unnamed private equity investor.

Filings with the corporate affairs ministry showed him trying to raise funds by pledging shares of his listed and four unlisted firms to pay off personal and company loans. Siddhartha and promoter group entities had pledged over 75 per cent of their shares in the BSE-listed CDEL as on March 31, 2019.

Siddhartha had several entities that borrowed money from a gamut of organisations, including banks and financial institutions, for his non-coffee businesses.

A letter, purportedly written by him, had 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.

Coffee Day Enterprises Ltd (CDEL) had a total current liability of Rs 5,251 crore as on March 31, 2019, up from Rs 2,457.3 crore a year back, according to regulatory filings.

CDEL's promoter companies -- Devadarshini Info Technologies, Coffee Day Consolidations, Gonibedu Coffee Estates, and Sivan Securities -- had also borrowed heavily from time to time.

While the exact quantum of the borrowings by the unlisted companies of Siddhartha could not be immediately ascertained, the total as indicated by the filings would be in addition to the amount CDEL owed to lenders.

Siddhartha's borrowings appear to have intensified after 2017 though there is no indication of just how many of them remain unpaid after their due date or have turned non-performing assets.

CCD crisis: Sical to deleverage firm, subsidiaries after Siddhartha's death

Sical Logistics, a unit of Coffee Day Group, has said that it is planning to deleverage the company and its subsidiaries in line with observations made by its ultimate holding company Coffee Day Enterprises, following the demise of promoter V G Siddhartha.

The board of directors, which met to consider approval of the June quarter financial results, asked the management to come out with recommendations for the same.

Following the demise of its promoter and further to the observations made by the ultimate holding company — Coffee Day Enterprises — to deleverage the Coffee Day Group, the board considers it appropriate to come up with a roadmap to deleverage Sical and its subsidiaries, the company said on Friday.

“Accordingly, the board has asked the Sical management to explore all strategic alternatives to deleverage the firm and its subsidiaries. In this direction, the management will come back with recommendations,” said the company.

Tanglin Retail Reality Developments, part of the group, has a 50.2 per cent stake in the logistics and supply chain solutions company. Giri Vidyuth (India) holds a 4.99 per cent stake while Siddhartha personally held 0.68 per cent stake.

However, the entire 400,000 shares held by Siddhartha and almost 95.3 per cent of Tanglin’s stake in Sical is pledged or otherwise encumbered.

According to the FY19 financial results, current liabilities stood at Rs 973.49 crore, while non-current liabilities stood at Rs 507.58 crore, as on March 31, 2018.

On July 30, 2019, after Siddhartha went missing, ICRA put the ratings of the company on watch with negative implication, as the development may have negative impact on the operations of Sical Group.

The development may have a critical bearing on the group's operations and credit profile, said the rating agency, before the death of the promoter was reported.

Till FY18, the promoters had infused around Rs 190 crore of unsecured loans towards various debt repayments and capital expenditure requirements; additional infusion is budgeted in the current financial year to meet the shortfall created by the lower margins.

The report stated that the firm was expecting support from the promoter group to continue, if cash flows of SLL were inadequate to meet debt servicing and capex requirements.

Net profit, on a consolidated basis for the quarter ended June 30, grew 23.5 per cent to Rs 2.79 crore, as compared to Rs 2.26 crore during the same quarter last year. Total income grew over 12 per cent to Rs 365.32 crore during the quarter, as against Rs 324.78 crore last year.

The group acquired majority stake in Sical from the previous promoters, the M A Chidambaram Group, in September 2011. The company is an integrated logistics solution provider for bulk and containerised cargo, and has business in mining, port logistics, road and rail transport, container freight station, warehousing, and shipping.

Cafe Coffee Day founder V G Siddhartha's body found from river: Report

The body of Cafe Coffee Day founder V G Siddhartha has been found from the Nethravathi river, according to TV reports on Wednesday.

Siddhartha's body was found on the banks of the river near the Hoige Bazaar in Mangaluru, according to news agency ANI.

Siddhartha, the founder of India’s largest coffee chain, went missing on Monday night en route to the coastal Karnataka city of Mangaluru, with a letter purportedly written by him showing he was under "tremendous pressure" from lenders and one of the private equity partners (PEs). The letter also alleged "a lot of harassment" from tax authorities. 

A massive search operation involving teams of the National Disaster Response Force, Coast Guard, Home Guard, fire services and coastal police had continued throughout Tuesday. Search teams had scoured the waters under a bridge across the Nethravathi river near Mangaluru where the 60-year-old businessman was reportedly last seen.

The son of a coffee plantation owner, Siddhartha had created the Indian rival to Starbucks. Coming from a family that has a 140-year history of growing coffee, he initially dabbled in stock trading, before setting his foot in the coffee business.

After being inspired by a chat with the owners of German coffee chain Tchibo, Siddhartha decided to open his own chain of cafes in India. With the tag line 'A lot can happen over a cup of coffee', he opened Cafe Coffee Day's first outlet on Bangalore's upscale Brigade Road in 1994. 

It's now the largest chain of coffee shops in India, with 1,750 cafes in more than 200 cities, including outlets in Prague, Vienna and Kuala Lumpur. Coffee Day went public in 2015.

In 1999, Siddhartha was roped in by IT veteran Ashok Soota when Subroto Bagchi, Rostow Ravanan and KK Natarajan were putting together IT firm Mindtree.

He was once the largest shareholder of Mindtree but decided to cash out. In March this year, he sold out his 20.41 per cent stake in MindTree to Larsen & Toubro (L&T), making close to Rs 2,858 crores profit. That deal helped him repay his debt of about Rs 2,900 crore.

Life and times of V G Siddhartha: From coffee planter's son to CCD founder

Son of a coffee plantation owner, V G Siddhartha created the Indian rival of Starbucks but his sudden disappearance and a letter by him alluding to pressures from a PE investor to buy back shares have left many questions unanswered.

Coming from a family that has a 140-year history of growing coffee, Siddhartha initially dabbled in stock trading before actually setting his foot in the coffee business.

He initially wanted to join the Indian Army but then envisaged interest in working as an investment banker in Mumbai after completing his Master's degree in Economics from Mangalore University. In 1984, he launched his own investment and venture capital firm Sivan Securities in Bangalore, and began investing the profits from his start-up to buy coffee plantations in Karnataka's Chikmagalur district.

Around this time, he also began taking interest in his family's coffee business. In 1993, he set up a coffee trading company called Amalgamated Bean Company (ABC) with an annual turnover over Rs 6 crore and over the years it increased to over Rs 2,500 crore.

Inspired by a chat with the owners of Tchibo, a German coffee chain, Siddhartha decided to open his own chain of cafes in a country that had no formative cultural grounding in cappuccinos. He opened Cafe Coffee Day's first outlet on Bangalore's upscale Brigade Road in 1994 with a tag line 'A lot can happen over a cup of coffee'.

It's now the largest chain of coffee shops in India, a nation of tea drinkers, with 1,750 cafes in more than 200 cities, including outlets in Prague, Vienna and Kuala Lumpur. Coffee Day went public in 2015.

Siddhartha, around 60, currently has 200 exclusive retail outlets selling his brand of Coffee Day powder all over South India. ABC is also India's largest exporter of green coffee.

Expanding his business portfolio, Siddhartha ventured into IT sector and founded Global Technology Ventures Ltd that identifies, invests and mentors technology companies.

He also entered the financial sector with investment firm Sivan Securities Private Ltd. The company has three subsidiaries - Chetan Wood Processing Pvt Ltd, hospitality business Barefoot Resorts and timber trading - Dark Forest Furniture Company.

In 1999, Siddhartha was roped in by IT veteran Ashok Soota when Subroto Bagchi, Rostow Ravanan and KK Natarajan were putting together IT firm Mindtree.

He was once the largest shareholder of Mindtree but decided to cash out. In March this year, he sold out his 20.41 per cent stake in MindTree to Larsen & Toubro (L&T), making close to Rs 2,858 crores profit. That deal helped him repay his debt of about Rs 2,900 crore.

Son-in-law of former Karnataka Chief Minister SM Krishna, Siddhartha found himself in trouble in September 2017 when the Income Tax (I-T) department conducted raids at over 20 locations linked to him.

Siddhartha reportedly had been witnessing rising debts, especially in the last few years.

His Coffee Day Enterprises Ltd had seen net loss widening to Rs 67.71 crore in the fiscal year which ended on March 31, 2018 from Rs 22.28 crore loss in the previous year. This was despite revenues climbing 59 per cent to Rs 122.32 crore.

He was reportedly in talks to sell his real estate venture Tanglin Developments Ltd to New York-based private equity giant Blackstone Group.

The MindTree sale had vastly improved his financial condition and the real estate deal would have further cut his debt. He was also in talks to sell Coffee Day Enterprises, where he held 32.75 per cent stake, to Coca-Cola for as much as $1.45 billion.

And so his sudden disappearance from Jappinamogaru, which is very close to Netravathi river and three kilometres from the sea, on Monday evening has left questions unanswered.

A letter by him to the CCD Board claimed that he was being pressured by "one of the private equity partners" forcing him to buy back shares, a transaction he had partially completed six months ago by borrowing a large sum of money from "a friend".

The letter also talked about "harassment" by an I-T Department official, who initially attached his shares in Mindtree.

The I-T Department on its part refuted the charges made in the letter saying the signature on it does not match with the record available with it.

His wife, Malavika Hegde, with whom he has two children, is on the CCD board.

"Company is professionally managed and led by a competent leadership team, which will ensure continuity of business," the CCD Enterprise said in a regulatory filing.