Coffee Day investigation reveals about Rs 2,000 cr missing from firm's accounts after death of VG Siddhartha; report likely to be released soon
Over a hundred-page draft report, which is expected to be released soon, mentioned about the financial transactions of Coffee Day and its dealings with dozens of private companies owned by Siddhartha.
An investigation of Coffee Day Enterprises reportedly found that about Rs 2,00 crore ($270 million) was missing from the accounts of Bengaluru-based coffee chain after the death of its founder VG Siddhartha, said a news report.
A probe initiated by the board of Coffee Day Enterprises (CDEL) soon after the death of Siddhartha reportedly revealed that at least Rs 2,000 crore is missing from the company's account, said a report in Financial Express.
Over a hundred-page draft report, which is expected to be released soon, mentioned about the financial transactions of the coffee chain and its dealings with dozens of private companies owned by the entrepreneur, the report said quoting people in the know of the development.
“The board of directors and the company are unaware of its content at this point of time. Hence it would be premature to speculate on the investigation findings,” the report said quoting a company spokesman.
Last month, US private equity giant Blackstone Group Inc reportedly paid the first tranche of Rs 150 crore to CDEL as part of acquiring the coffee venture's Bengaluru-based Global Village Tech Park.
Blackstone will pay another Rs 2,000 crore in the next two weeks for the technology park and the remaining amount of Rs 550 crore is expected to be paid in a span of one year.
The deal values the technology park at Rs 2,700 crore.
With this Blackstone payout, it is expected that CDEL's working capital situation may improve. A majority of the proceeds are expected to be utilised to bring down the overall debt of the company.
In January this year, the Bengaluru-based coffee chain had cleared all the major hurdles including government approvals and a green signal from most of its lenders. Last month, the Commerce Ministry had cleared the proposed deal and this was necessary since the 90-acre IT-focussed tech park comes under the special economic zone (SEZ) regulations.
In December last year, Coffe Day's plans to sell its Global Village Technology Park to Blackstone Group hit a hurdle after its largest creditor Yes Bank reportedly did not give its approval to the deal.
The deal got stalled after Yes Bank reportedly put up a condition that “no objection" would be given to the deal only if Coffee Day is ready to repay the entire loan taken by the group from the lender or at least the loans taken by Coffee Day’s arms—Tanglin Developments (which owns the tech park) and Sical Logistics.
The Coffee Day group’s debt was reported at Rs 7,100 crore in April 2019 but it had come down to Rs 4,980 crore after the sale of a 20.41 percent stake in Mindtree to engineering and construction conglomerate Larsen and Toubro in May this year.
In November last year, CDEL had reported a multi-fold jump in consolidated net profit at Rs 1,567.20 crore for the June quarter, helped by an exceptional gain from stake sale in IT firm Mindtree.
The company, which runs Cafe Coffee Day chains, had reported a profit of Rs 21.06 crore for April-June period a year ago, CDEL said in a regulatory filing.
In July last year, Coffee Day Group promoter Siddhartha was found dead in Netravati river near Mangaluru in Karnataka two days after he had gone missing.
In a letter purportedly written by him, Siddhartha mentioned severe financial stress being faced by his group firms, among other issues.
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