Café Coffee Day:

Case Analysis
Presented by:
Aayush Modani: C20- 001 Aditi Jain: C20-007
Aayushi Tanwar: C20-003 Aditya Kankar: C20-008
Abhishek Pal: C20-004 Aditya Malpani: C20-009
Abhishek Pandey: C20-005 Aditya Sejpal: C20-010
Adarsh Jalan: C20-006 Agnik Chatterjee: C20-011

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 Promoter - V.G. Siddhartha
 Hailing from family that has 140 years history of growing coffee.
 Graduated in Master in Economics from Mangalore University.
 Joined JM Financial Limited in 1983-1984 in Mumbai as a
management trainee in portfolio management and securities.
 Founded “Sivan” securities an investment and venture capital
firm in 1984.
 Set up a coffee trading company ‘Amalgamated Bean Company’
(ABC) with annual turnover of INR 6 crore and over the year
increased to INR 2500 crores.
 Inspired by the owners of German coffee chains Tchibo, decided
to open his own chains.
 Incorporated Coffee Day Global in 1993.
 Opened India’s first premium coffee shop, Café Coffee Day in
Bangalore 1996.

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 Early Years and Idea Behind CCD
• Amalgamated Bean Company (ABC) was formed in 1993 for
coffee exports.
• ABCTCL would trade 20,000 tonnes and became 2nd largest
coffee exporter of India.
• The idea behind CCD was to develop a premium ambience for
people to discuss over coffee.
• In 1996, the first CCD store opened on Bangalore’s crowded
Brigade Road where coffee and an hour of Internet surfing costed
INR 100.
• Bangalore was on the cusp of a transformation to IT and lifestyle
haven.
• CCD opened its coffee chain right next to its rival.

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 CDEL (Holding Company): Standalone Financial
Analysis

 ROE has been decreasing every year which clearly shows the
decrease in wealth of shareholders.
 Return on sales has been negative throughout which is a sign of
less profitability.
 Debtors have been increasing whereas sales on the other hand
have been low as compared to that of the previous year.

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 CDEL (Holding Company): Consolidated
Financial Analysis

 Current Ratio decreased from 3.11 in 2017 to 1.14 in 2018 showing a decrease
in the short term liquidity due to increase in short term borrowings.
 EBITDA margin is around 20% whereas profit margin stands roughly around 2%.
This happened due to high finance costs which comes from long and short term
borrowings.
 Interest coverage ratio is also less which shows that a major part of the profit
goes into paying the finance costs (interests).

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 CCD Expansion
 In 2011, CCD had around 1000 outlets
which increased to 1740 outlets spread
across 250 cities by 2018.
 The company adopted cluster approach
for expansion under which they had as
many as 4 CCD cafes in a single street.
 The plan was to act as an entry barrier to
new competition by making the
consumers habituated to the brand.
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 Funding of CCD
Café Coffee Day Enterprises Ltd had debt of around INR 6,547 crore on March 31, 2019
which at one point debt increased upto INR 11,000 cr.

Since 2014, the promoters had mortgaged shares over INR 3,522 crore to various lenders.

Also raised funds from two leading foreign private equity KKR and standard chartered PE
which together owns 12% in CCD.

In August 2019, the market capitalization of CCD fell from INR 4,067 crore to INR 2,343
crore.

Issued an IPO aggregating INR 1,150 Cr. The face value of each share was INR 10 which
were issued at a price of INR 328.

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 Competitor Analysis
Brand Number of Outlets in India Total Revenue for 2018-19

Cafe Coffee Day 1500 + 996.51 Crore

Barista 200 673 Crores

Tata Starbucks 157 450 Crores

Dunkin Donuts 77 NA

Costa Coffee 46 NA

 An array of small unorganized coffee outlets are also prominent in

India and are giving a tough competition to Café Coffee Day.
 A number of small retail outlets like mocha café are coming up and
are taking the market share from it.
 Even after the stiff competition CCD remains an undisputed leader
in café industry.

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 Coffee Industry Analysis
The café chain market, led
by Cafe Coffee Day and Tata
Indian café chain market to
Starbucks, is one of the
reach INR 4,540 Cr by 2023
fastest growing categories in
which was valued at INR
the consumer food service
2,570 Cr in 2018.
industry which is estimated
to grow by 6.9%.

Consumers visiting cafes in

CCD is very aggressive in
India are primarily 18-35
expanding as it has 3 times
years old and comprises the
the number of stores of its
country’s primary working
top 3 competitors put
force with higher disposable
together.
income.

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 Coffee Day Diversification

6. INVESTMENTS: 1. RETAIL:
COFFEE DAY TRADING COFFEE DAY GLOBAL
Coffee day global started in
Started in year 2000 1993.
Chain of Coffee & Brevarages
6 1 shop

5. FINANCIAL SERVICES: 2. TECH PARK&SEZ:

WAY2WEALTH TANGLIN
The broking & commission 5 2 Currently operating an SEZ park in
business comprise Bengluru and a Tech park in Mangalore

equity,commodity & currency

brokerage .
4 3
3.HOSPITALITY:
SERAI
4. LOGISTICS :SICAL First resort came in Chikmanglur
Kranataka.
Port handling, Road&Rail,Container In 2014 they also acquired minority stake
freight & Mining in The Bare Foot resort Andaman &
Nicobar.

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 Early Warning Signals about CCD’s
Financial Issues
 In Sept 2017, Income Tax department
conducted raids on the properties and
offices of Siddhartha and CCD group
over suspicion of tax evasion.
 Because of the increase in borrowings,
the accrued interest was also
increasing, which put a lot of pressure
on the business.
 The total loans for CCD enterprises rose
by more than 46% in the last three
years, which amounts to INR 9,409
crore.

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 Early Warning Signals about CCD’s
Financial Issues
 Also, the percentage of shares pledged by
Siddhartha almost doubled from June 2018
from 39% to 71% in June 2019.
 His balance sheet reveals that in the last
one year his short term INR 810.91 crore to
INR 3889.63 crore.
 In March 2019, V.G. Siddhartha pledged
20.32% of his IT service firm to L&T for
getting INR 3000/- crore which was used
for debt offloading.
 In Jan 2019, two million shares of Mindtree
held by Siddhartha were attached by the
Income Tax dept to block a stake sale in
software services from Mindtree to L&T.

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 Political Conspiracy behind the
Suicide?
In letter also he
Congress blames IT accused IT dept.
dept. harassment as Officials of harassing
the reason behind the him.
suicide

Where as IT dept. has

questioned the
authenticity of the
letter.

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Thank You
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