Coffee Day Enterprises (₹36.40): Debt Woes Shrink as Coffee Estates Offer Lifeline......

Crunching the Real Numbers Behind the Asset Valuation Hype.....

~Sumon Mukhopadhyay.

------------------------------------------

When Café Coffee Day (CCD) first emerged on the Indian café scene in the late 1990s, few realized the sheer scale of agricultural operations backing the brand. 

Today, Coffee Day Enterprises Limited (CDEL), the parent company of CCD, is credited with managing one of Asia’s largest privately owned coffee plantations — a claim often pegged to a 20,000-acre figure. But how accurate is that number?

Origins of the Coffee Empire:

Founded by the late V.G. Siddhartha, CDEL’s backbone has always been its coffee estates nestled in the verdant hills of Chikkamagaluru and Mudigere in Karnataka. These plantations produce Arabica and Robusta beans that fuel the company’s beverage business and support exports through Amalgamated Bean Coffee Trading Company Ltd., CCD’s sourcing arm.

Digging into the Numbers:

📰 Source	Claimed Acreage	Notes
Wikipedia / CCD Profiles	~20,000 acres	Includes total holdings; touted as Asia’s largest private plantation
V.G. Siddhartha’s letter (2019)	~12,000 acres	Family and company owned plantations pre-crisis
Times of India / Economic Times	10,000–12,000 acres	Includes acquired and managed land across estate clusters
The News Minute / Slideshare	~15,000 acres	Located specifically in Chikkamagaluru and Mudigere

Note: The 20,000-acre figure likely combines personal, company, and associated entity holdings, whereas verified company-owned acreage sits between 12,000–15,000 acres.

Beyond Beans: Timber & Terrain:

These estates aren’t just about coffee. CCD has long held timber assets — primarily silver oak trees — that are intercropped for shade and commercial value. Such biodiversity has added both ecological complexity and financial worth to the plantations.

Post-2019 Reassessment:

After V.G. Siddhartha’s untimely passing in 2019, scrutiny around the company’s finances and asset ownership intensified. Several assets were reevaluated for potential divestment, reshuffling ownership between CDEL and family-affiliated entities. This caused shifts in how estate acreage was recorded across different documents.

 Final Verdict

• Yes, CDEL through its subsidiaries manages extensive plantations, making it a major player in Asia’s coffee economy.
• But, the core company-controlled estate is more realistically pegged at 12,000 to 15,000 acres, based on documented filings and public statements.
• The 20,000-acre claim remains valid if understood as a cumulative figure spanning corporate and family holdings.

Land Valuation Analysis:

Recent estimates pegged the per-acre rate at ₹15 lakh, sparking discussions around total valuation across 20,000 acres. Let's revisit the math and offer a clear breakdown:

Land Valuation Table:

Per-Acre Rate	× 20,000 Acres	= Valuation (in ₹ crore)
₹15 lakh	₹1.5 million × 20,000	₹3,000 crore
₹22.5 lakh	₹2.25 million × 20,000	₹4,500 crore
₹30 lakh	₹3 million × 20,000	₹6,000 crore

Financial Performance: A Turnaround in Progress:

For the fourth quarter of FY25 (ending March 2025), CDEL reported a significantly reduced net loss of ₹33 crore, a marked improvement from the ₹303 crore loss recorded in the same quarter the previous year. Over the full fiscal year, the company further narrowed its net loss to ₹58 crore from ₹322 crore in FY24, signaling a positive trajectory in its financial recovery. 

Revenue growth complemented these efforts, with Q4 revenue rising by 7% year-on-year to ₹268 crore and full-year revenue increasing by 6% to ₹1,078 crore. A standout metric in CDEL’s performance was the substantial improvement in its EBITDA. The company reported a Q4 EBITDA of ₹89 crore, a stark contrast to the negative ₹319 crore in the corresponding quarter of FY24. For the full year, EBITDA reached ₹223 crore, compared to a negative ₹208 crore in the prior year. 

These figures underscore CDEL’s focus on operational efficiency and cost management, even as it continues to operate in a competitive market.

Strategic Debt Reduction and Asset Sales:

CDEL’s efforts to address its liquidity challenges and reduce its debt burden have been pivotal. As of March 31, 2025, the company reported a total default of ₹425.38 crore on interest and principal repayments for loans and unlisted debt securities, including ₹174.83 crore on principal and ₹5.78 crore on interest. The company attributed these delays to a liquidity crisis but has actively pursued asset resolutions to mitigate its financial strain.

A key move in this direction was the settlement agreement announced on March 17, 2025, to clear ₹205 crore in dues owed to two debenture holders. This settlement, approved by CDEL’s Audit Committee and Board, includes ₹55 crore from the sale of a 12.41% stake in Coffee Day Global Limited, a subsidiary operating the Café Coffee Day chain. Additionally, CDEL raised ₹55.80 crore through the sale of corporate buildings by Coffee Day Global and recorded a ₹15.55 crore profit from land sales by Coffee Day Hotels & Resorts Private Limited. These transactions reflect CDEL’s pragmatic approach to debt reduction and its commitment to long-term financial stability.

NCLAT Relief Boosts Investor Confidence:

A significant catalyst for CDEL’s recent stock performance was the National Company Law Appellate Tribunal’s (NCLAT) decision on March 3, 2025, to set aside insolvency proceedings initiated by IDBI Trusteeship Services Ltd over a ₹228.45 crore default. The ruling followed a legal battle that saw the Supreme Court set a February 21, 2025, deadline for NCLAT to resolve the appeal, with the risk of automatic resumption of insolvency proceedings if unmet. The NCLAT’s favorable verdict led to a 20% surge in CDEL’s stock price, hitting its upper circuit limit on both BSE and NSE, with shares reaching ₹30.78 and ₹30.63, respectively. This rally, coupled with a 56.71% stock price increase over six months, reflects renewed investor confidence in CDEL’s recovery efforts.

Conclusion: 

Coffee Day Enterprises Ltd (CDEL), the parent company of the iconic Café Coffee Day chain, has demonstrated notable resilience in its financial performance for the fiscal year 2025, navigating challenges with strategic debt reduction and operational improvements. Despite a turbulent past few years following the demise of its founder, V.G. Siddhartha, in 2019, CDEL has made significant strides in stabilizing its operations and strengthening its balance sheet, as reflected in its latest financial results and key corporate developments.

----------------------------------

Disclaimer: The plantation valuation estimates are speculative and based on market data, listing prices, and agricultural land trends in Karnataka. They do not reflect formal valuation reports or audited figures. Investors should exercise discretion and seek professional advice before making investment decisions.