Trouble brews at coffee retailer: Siddhartha had personal debt of more than Rs 1,000 crore

MUMBAI: Café Coffee Day’s late founder VG Siddhartha had taken on debt of more than Rs 1,000 crore through entities that housed his personal holdings, according to corporate affairs ministry documents accessed by ET. A letter purportedly written by Siddhartha to the board and employees of Café Coffee Day, before he went missing, had cited growing pressure from creditors and a private equity partner.
Devadarshini Info Technologies, Gonibedu Coffee and Coffee Day Consolidations are the main entities through which this debt was raised, according to the data. In September 2014, Devadarshini secured Rs 471 crore through optionally convertible debentures from Standard Chartered Private Equity (Mauritius), Credit Opportunities Fund and Asia Credit Opportunities (Mauritius). In November 2018, Devadarshini raised Rs 300 crore from SSG Asia and partially repaid these OCDs, sources briefed on the matter said. Other debt facilities include a Rs 450 crore exposure in Gonibedu Coffee. It could not be verified whether these debts have been repaid or not.

ET reported on Tuesday that US private equity giant KKR has a Rs 255 crore exposure to Siddhartha’s personal holding entities. The option of convertibility could have meant Siddhartha having to cede control of the personal holding entities.


NCDs Alloted
Siddhartha’s real estate firm Tanglin Retail Realty, which owns an information technology park on Mysore Road in Bengaluru, allotted 30,000 secured, rupee-denominated non-convertible debentures (NCDs) — each valued at Rs 10 lakh — to Standard Chartered Bank (Singapore) on March 25. However, according to a source close to Standard Chartered, this Rs 3,000 crore was an enabling resolution by the Tanglin board and the bank’s exposure didn’t extend to the full amount.

Standard Chartered declined to comment. SSG Capital partner Shyam Maheshwari didn’t respond to queries. Gonibedu Coffee, Tanglin, Devadarshini Info and Coffee Day Global also didn’t respond to queries.

Listed Cafe Coffee Day had total borrowings of Rs 6,547.38 crore as of March 31, 2019, up 30% from the previous financial year. Siddhartha and his group firms held a 53.93% stake in the company, of which 75.70% was pledged as of June 30. Siddhartha had borrowed from Aditya Birla Finance, Kotak Mahindra Bank, AK Capital, STCI Finance, APAC, RBL Bank and SSG Asia against pledged shares of the listed firm.

“I am sorry to let down all the people that put their trust in me,” said the letter cited above. “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. Tremendous pressure from other lenders lead to me succumbing to the situation.”