2. Contents
• Company Overview
• Business model of CCD
• Downfall of CCD
• Failure of Corporate governance &
compliances
• The Present Day CCD
3. Company Overview
The first CCD outlet was
set upon July 11, 1996,
at Bangalore,
Karnataka.
The first CCD outlet was
opened by V.G.
Siddhartha
with an initial investment
of ₹ 1.5 crores.
In a matter of few years,
Café Coffee Day
became one of the most
dominant players in the
Coffee business market.
4. • CCD founder, initially feared of
achieving a target of 500 tonnes, ended
up selling 6,500-7,000 tonnes of
branded coffee, exports about 28,000
tonnes of coffee.
• Additionally, the cafes attract at least
40,000 to 50,000 visitors per week.
5. Business model of CCD
• The business idea of CCD was debt centric.
• In 2015, CCD had accumulated a debt of
₹ 6328 crores.
• Launched an IPO of 1150 crores
• In 2018, they had a debt of 4411 crores which
rose to ₹ 6547 crores in March 2019.
• Took short term loans in the form of
debentures with high-interest rates to pay off
their long term debt.
• Profit was not sufficient to cover the huge
debts of the company
6. Downfall of CCD
• IT dept. raid on CCD retail chains and found
about ₹ 362 crores concealed income.
• The IT raids and the private body asking to
buy back shares created a lot of pressure
and ultimately V.G. Siddhartha had to over
everything.
• The Mint investigation findings said ₹ 2,600
crore was missing from the books through
several related-party transactions.
• Report in The Economic Times suggested
that the hole in CDEL’s books may be
significantly higher at ₹ 3,500 crore- ₹4,000
crore.
7. • CCD sold stakes of several promoter-
owned entities and other entities which
include the sales of around 20.32%
stake in Mindtree Connect to L&T for
approximately
₹ 3,2000 crores.
• In March 2020, Coffee Day Enterprises
Limited announced that it has reached
an agreement to sell Global Village
Technology Park, for ₹ 27 billion.
8. Failure of Corporate
governance and
compliances
• The promoter and promoters’ group held
approximately 53.93% of shares.
• Shareholding Pattern of top 10
shareholders, other than directors and
promoters, indicated that NLC Mauritius
LLC. and KKR Mauritius PE Investments
Ltd. held the highest no. of. shares which
are 10.61% and 6.07% shares
respectively.
• V.G. Siddhartha held around 32.75 of the
shares. thereby compromising the
financial independence of the coffee
chain.
9. The company’s financial statements and audit reports did not
record most of the business services exchanged with around
40+ subsidiaries. It was alleged that the money transferred to
these entities was diverted for other investments and ventures.
The organization shall follow the guidelines provided in the
Companies Act, 2013 and in SEBI LODR Regulation, 2015 which
provides the obligations to be followed by a listing company.
In the case of CCD, the promoter disregarded the interest of its other
shareholders by pledging more than 30% of his shares affecting the
rights of shareholders given in Regulation 4(2) of the SEBI Listing
Obligations & Disclosure Requirements Regulations. The audit
committee also failed to identify the transactions leading to
mismanagement.
10. The Present Day CCD
According to sources, the corporation had a
debt of Rs 7200 crore.
When Malavika Hegde took over as CEO of
CCD, the company was practically written off
the commercial map.
Despite the company's rising debt, Malavika
never raised the price of the coffees that were
sold.
She was also effective in acquiring new
investors, which allowed her to increase the
company's capital.
The debt was reduced to Rs 3100 crore by the
end of March 2020, and then to Rs 1731 crore
by the end of March 2021.
