Rama Krishna Sangem
Four years after its founder chairman VG Siddharth committed suicide due to heavy debt burden, the Cafe Coffee Day, chain of coffee shops across the country, led by his wife Malavika Hegde, appears to be inching towards good days. Of course, the coffee shops chain is still in losses, but it’s performing well, so that it can tide over the crisis in near future. Siddhartha committed suicide 0n 29, July 2019.
Siddhartha created a history by launching Cafe Coffee Day, or CCD as popularly called youngsters, in 1097. CCD coffee shops, with the tagline of A Lot Can Happen over a Coffee have become addas for IT professionals and students. As the chain went on expanding its footprint, unmindful of its profitability, soon they ran into losses and debt burden piled up hugely. Founder Siddhartha paid a heavy price for the debt. Malavika took over since then.
Coffee Day Global Ltd (CDGL), the company that operates coffee chain Cafe Coffee Day, and its financial creditor IndusInd Bank have reached a settlement, news agency PTI reported on September 13, Wednesday. Following this, the National Company Law Appellate Tribunal (NCLAT) has set aside an insolvency order against CDGL.
The counsel representing CDGL and IndusInd Bank informed the Chennai bench of the NCLAT about the settlement and sought permission to withdraw insolvency litigations. A two-member bench comprising Justice M Venugopal and Shreesha Merla took their submissions on record and set aside the order admitting CDGL to insolvency.
On July 20, the Bengaluru bench of NCLT had directed the initiation of insolvency proceedings against CDGL. It was on a plea filed by IndusInd Bank, a financial creditor of the company, claiming dues of Rs 94 crore.
Malavika Hegde opposes NCLT order
After suspending the board, NCLT had also appointed Shailendra Ajmera as the interim resolution professional. CDGL had requested a short-term loan of Rs 115 crore in February 2019.
On August 11, through an interim order, NCLAT had stayed the order of NCLT. The NCLT order was challenged by Malavika Hegde, director of CDGL and the wife of late VG Siddhartha.
As per the annual report of its parent firm Coffee Day Enterprises Ltd (CDEL) for 2022-23, CDGL owns 469 cafes in 154 cities and 268 CCD Value Express kiosks. It operated 48,788 vending machines that dispense coffee in corporate workplaces and hotels under the brand.
In FY23, CDGL’s consolidated net operational revenue was Rs 869 crore and had reported a loss of Rs 67.77 crore.
CDEL has been in trouble since the death of founder Chairman V G Siddhartha in July 2019. It is paring its debt through asset resolutions and has significantly reduced it from the time the trouble started.