In an explosive revelation, data swept from stock exchanges and Ministry Of Corporate Affairs’ filings have unraveled that deceased Cafe Coffee Day promoter VG Siddhartha may have been under an enormous debt pile of up to Rs 11,000 crore, even though it’s a mystery where such large funds were deployed and how. While listed firm Coffee Day Enterprises reported a debt of Rs 6,547 crore on 31 March 2019, fresh data from Siddhartha and promoter group’s 4 private holding companies reveals they had outstanding pledges worth Rs 3,522 crore as of fiscal 2018-19.
Besides, Siddhartha, along with two other CDEL directors, had given personal guarantees towards loans worth Rs 1,028 crore raised by Coffee Day Enterprises, the listed firm, according to CDEL’s 2017-18 annual report. Four promoter companies of coffee king VG Siddhartha’s Coffee Day Enterprises Limited (CDEL) had mortgaged shares worth over Rs 3,522 crore to various lenders since 2014 to raise loans, data collated from companies’ declarations has revealed.
It’s still unclear how much of private holding companies’ pledges were towards loans raised by CDEL. Or, whether most of it was towards loans in a personal capacity. But at some point, the peak debt of Rs 11,096 crore may have become unmanageable for the coffee king forcing him to take the extreme step of jumping to death on July 29, 2019. Especially, since falling share price requires promoters to make up the gap through more assets. Else, lenders rush to invoke the pledged shares.
Listed firm Coffee Day Enterprises stock had fallen by 48 per cent from its peak of Rs 374.60 on January 22, 2018, to Rs 192.55 at closing on July 29, 2019, the day of his suicide – resulting in an erosion of Rs 3,541 crore in market cap. Siddhartha and his group entities held a 53.93 per cent stake in Coffee Day Enterprises, of which 75.70 per cent was pledged as of June 30.
These revelations confirm Siddhartha’s purported statement in his last letter regarding the debt burden and lenders’ pressure he could not cope with. His letter before his alleged suicide on July 29 mentioned his inability to cope with the company’s debt and his face-off with the income tax authorities as reason for ‘failing as an entrepreneur’.
However, he listed all his assets worth nearly Rs 18,000 crore as enough to pay off all the liabilities. “I have enclosed a list of our assets and tentative value of each asset… our assets outweigh our liabilities and can help repay everybody,” he says in his last letter.
New data from four promoter companies — Devadarshini Info Technologies, Coffee Day Consolidations, Gonibedu Coffee Estates, and Sivan Securities – reveals they raised funds by mortgaging shares held in the listed company Coffee Day Enterprises between 2014 and 2019. These companies had combined shareholding of 17.13 per cent in CDEL. Coffee Day Consolidations Private raised the maximum Rs 1,533.57 crore followed by Devadarshini Info Technologies’ Rs 1,171 crore.
Devadarshini Info Technologies holds 5.87 per cent shares in CDEL, and pledged shares on various loans and mortgages amounting to 83.08 per cent of its holding. Coffee Day Consolidations has 5.81 per cent shareholding in CDEL, while its pledged shares amount to 95.94 per cent. Similarly, Gonibedu Coffee Estates holds 5.24 per cent shares in Coffee Day and its pledged share amount to 78.94 per cent. Sivan Securities has pledged 99.9 per cent shares and its holding in Coffee Day Enterprises is at 0.21 per cent.
