(Image source from: Forbes India)
Days after the death of Cafe Coffee Day founder VG Siddhartha, the Mangaluru police said he was riddled with debt amounting to several hundreds of crores.
Speaking to The News Minute, police officials investigating the death of Siddhartha from all the corners including his financials say that the several holding companies of Coffee Day, in which he was a shareholder, had incurred a debt of Rs 3,500 crore in total.
“Devadarshini Info Technologies, Sivan Securities, Coffee Day Consolidations and Gonibedu Coffee Estates were Siddhartha's personal holding companies and he had pledged his shares in these companies for the loan,” police sources say.
"Coffee Day itself was in debt and in addition, there was the debt to these private holding companies. We suspect that this huge amount of debt had put him under a lot of stress. He had leveraged shares in so many companies he owned that it had become difficult to repay them," the police said.
According to police officials, Siddhartha wanted to clear the loan he had taken from the private equity firm Standard Chartered Private Equity (Mauritius), Credit Opportunities Fund and Asia Credit Opportunities (Mauritius) and the U.S. based private equity giant KKR. Standard Chartered and KKR had 5.6 percent and 6 percent stake in Coffee Day Enterprises.
"Devadarshini Info had also taken a loan from these two PE firms. He wanted to pay back the loans to Standard Chartered and KKR as he had pledged that the lenders could take over his shares in Coffee Day if he failed to repay the loans," the police added.
According to a report by Economic Times,Devadarshini secured Rs 471 crore through optionally convertible debentures from Standard Chartered Private Equity (Mauritius) in September 2014. Gonibedu Coffee too had a debt facility of Rs 450 crore.
As on March 31, 2019, the whole debt of Cafe Coffee Day Enterprises stood at Rs 6,547 crore, which is nearly 2.5 times the net worth of Rs 2,529 crore.
Siddhartha had begun efforts to reduce debt overall. Despite being one of the first and largest investors in Mindtree, he sold his 20.32 percent stake in the IT services company for around Rs 3,200 crore. After tax, the remaining of this money went towards bringing down debt in Coffee Day.
Besides this, Siddhartha was also in talks with beverage Coca Cola to sell a major portion of the equity to the beverage giant, while eyeing a valuation of around Rs 10,000 crore.
According to reports, Blackstone was also in talks to buy a majority stake in Siddhartha's real estate venture Tanglin Developments for about Rs 2,800 crore. Tanglin has a tech park with 4-million-sq ft tenanted office named 'Global Village', located on a 120-acre campus in Bengaluru, and counts Accenture and Mphasis among its tenants, apart from having the headquarters of Mindtree.
VG Siddhartha’s body was found in the river by fishermen on Wednesday morning after a 36-hour search operation. His last rites were performed in Chikkamagaluru later on Wednesday.
By Sowmya Sangam