Café Coffee Day: Corporate Failure

CAFÉ COFFEE DAY: CORPORATE FAILURE 

Cafe Coffee Day is a multinational coffee House sale that was headquarter in Bangalore. It was founded by VG Siddhartha. It had almost 550 outlets as of June 2021 . It had the offered to provide with customers a free space where are the customers could have a cup of coffee as well as enjoy an hour of internet freely. Compared to all other competitors of Cafe Coffee Day like Starbucks or any other brands, they were very cheap and the offered the internet free for an hour They had put forward the idea that "A lot can happen over coffee".

           Cafe coffee Day was a very debt centric company and it started with a depth of 1.5 crore to start its first outlet. It was a very depth oriented form and as of 2019 it had debt of 6547 cross and 1150 crore initial public offer. This firm did bring a very good amount of revenue ,that is rupees 4262 cross revenue as on March 2019 but even with all the revenue ,they only earned the profit of 143 cross and that was not sufficient to fill out the depth that they have taken for operating their business. It was a difficult road,but it when even down hill when the income tax raid happened and it was revealed that around 650 crores of accountant money . It led to the sea siezure of the shares of Cafe Coffee Day. To get over the issue of unmet debts,they also had other another subsidiary company Mindtree,which they try to sell but that idea was blocked by the Icome Tax department as they had not repaid the amount of tax. They even try to sell shares to Larsen and Toubro to fill out there 3200 crore debt but that idea also then go much forward. They also tried selling the other subsidiary that they are that is Tanglin Developments that were involved in selling tech parks , IT parks etc but that too failed .They even reached out to popular brand like coca cola for the sale of the shares but that also didn't work out.

          Also to add to the pressure, the CCD auditors said that they had not auditted 40 of the subsidies of CCD. The news spread to the Board of Directors and also the lenders. The lenders now refused to lend money to CCD. The shareholders insisted that the company buyback their shares and give them them amount that the shares were to pay. CCD face a lot of issues to fund for their activities as well as even to liquididate,as liquidation doesn't happen overnight and they were in need for a lot of money. This eventually lead to the suicide of their founder V G Sidhartha. And there after the prices of the shares of CCD when down drastically by 66.5%.

Niranjan 

Posted by : Niranjan August 05, 2023 Tags : company , Failures , governance

Subscribe by Email

Follow Updates Articles from This Blog via Email