Cafe Coffee Day: 10 things to know about its parent IPO

Moneycontrol Bureau The market is gearing up for a new kid in the block, Coffee Day Enterprises Ltd (CDEL), touted to be one of biggest initial public offer (IPO) offer in three years. The company which operates popular coffee brand Café Coffee Day plans to raise Rs 1150 crore through IPO which will open on October 14 and close on October 16. It has fixed a price band of Rs 316-328 for the share sale. The stock is likely to be listed on bourses by November 2.So, here are 10 things you need to know about the IPO#1 V G Siddhartha, who is the main promoter as well as Chairman and MD, holds 54.78 percent stake, while all promoters together have 92.74 percent holding in the company. Among other major shareholders, KKR has 3.43 percent and Nandan Nilekani, Infosys co-founder and former chief of UIDAI, has 1.77 percent stake.#2 Coffee Day Enterprises is the parent company of the Coffee Day Group and operates coffee business through a subsidiary, Coffee Day Global Ltd (earlier known as Amalgamated Bean Coffee Trading Company Limited) and its subsidiaries.#3 Apart from the Café Coffee Day chain, the holding company houses other businesses like development of IT-ITES technology parks (Tanglin Development Limited), logistics (Sical Logistics), financial services (Way2Wealth Services), hospitality (Coffee Day Hotels & Resorts Private Ltd) and investments in companies like Mind Tree.#4 The company proposes to utilise the net proceeds towards:

#5 It owns a network of 1,472 Cafe outlets spread across 209 cities in India. As of Dec 2014, Cafe Coffee Day has market share of 46 percent in India in terms of the number of chained cafe outlets. #6 Besides coffee outlets, it is also in the business of procuring, processing and roasting of coffee beans to retailing of coffee products across various formats. It is one of the largest exporters of Indian coffee beans, primarily to Europe, Japan and the Middle East. In an interview to CNBC-TV18, Siddhartha said that the company will add 135 stores every year for next three years and going to add 5,000 coffee vending machines in the corporate. CCD is also expanding coffee roasting facility from 8,000 tonne to 16,000 tonne.#7 On consolidated basis, the company incurred a net loss of Rs 77 crore in FY15, up from Rs 21.40 crore in year-ago period. In the nine-month period ending December 2014, the company had a loss of Rs 75.2 crore.

#8 As on March 2014, debt stands at Rs 3326.5 increased from Rs 2390.5 crore on annual basis.  Its consolidated net indebtedness totalled Rs 2863.83 crore (total debt in accordance with the restated consolidated financials less convertible debentures, less loans from related parties and cash and bank balance including fixed deposit and margin money deposit with bank). “Rs 500 crore will go to payback the debt. Another Rs 600 crore cash will be left in the company, in that coffee business we are putting Rs 125 crore to clear the debt of the coffee business and Rs 290 crore to expand the coffee business for next 18 months,” Siddhartha says in an interview.

#9 In Financial Years 2012, 2013 and 2014 and the nine month period ended December 31, 2014, 36, 42, 44, and 175 cafés were closed down. These closures were owing to a variety of business related factors such as non-renewal of leases, low revenue generation from outlets and unfavourable location of outlets. CCD expects to continue to close anywhere between 25 to 40 outlets every year.

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Nasrin Sultana

Special Correspondent|Moneycontrol.com

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#10 Axis Bank, Citigroup Global Markets, Edelweiss Capital, Kotak Mahindra Capital, Morgan Stanley India and YES Bank are lead managers of the IPO.Follow @NasrinzStory