Coffee Day hires IDFC for the sale of retail businesses, delays audited results
Bangalore: Coffee day Enterprises (CDEL), which runs the Cafe Coffee day chain, has delayed its audited financial results for the second successive quarter due to an ongoing investigation about the letter written by its former chairman VG Siddhartha, before he took his own life.
The firm said Wednesday that it agreed IDFC Securities to evaluate strategic options for the company including divestment of its holding in Coffee day Global (CDGL) and other group companies, excluding Sical Logistics.
Coffee day has also authorised Siddhartha's wife Malavika Hegde, or chief financial officer Jayaraj Hobli of CDEL, to finalise the appointment of required agencies for conducting financial, legal, and commercial due diligence towards disinvestment of stake in CDGL.
The company had appointed Ashok Malhotra, former DIG of CBI, to investigate the circumstances leading to certain statements made in the letter written by Siddhartha and to scrutinise the books of accounts of the parent company and the subsidiary. "The said assignment is under progress and is likely to take few more weeks for completion," Coffee day said in a filing with the BSE.
The figures compiled by the company's administration show that the coffee business reported a 3% drop in operating income to Rs 460 million during the first quarter, while incurring a loss of Rs 61 million rupees due at the close of 280 coffees between April and June. At the company level, CDEL reported a net profit of Rs 1,509 million rupees due to a gain of Rs 1,659 million rupees from the sale of shareholding in the IT company Mindtree.
CDEL also said that Sanjay Nayar, the India head of private equity firm KKR, has resigned from the board. The private equity giant holds 6% of the company. Coffee day has total debt of Rs 4,970 crore, according to its regulatory filing on August 17. In Siddhartha's letter, it was stated that he faced tremendous pressure from lenders and harassment by income tax authorities. The major lenders include Standard Chartered Bank, IDBI Bank and Yes Bank.