We have reduced the debt burden, the worst is over: Coffee Day Enterprises’ Malavika Hegde – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/cons-products/food/we-have-reduced-the-debt-burden-the-worst-is-over-coffee-day-enterprises-malavika-hegde/articleshow/80239216.cms?utm_source=ETTopNews&utm_medium=HPTN&utm_campaign=AL1&utm_content=23

SynopsisI am bullish on both the cafe and vending businesses. Both businesses will need to pass a few more hurdles before they flourish, says Coffee Day Enterprises’ new CEO Malavika Hegde.

Coffee Day Enterprises’ new chief executive officer Malavika Hegde, who has taken a hands on-role at the company since the demise of her husband and former chairman VG Siddhartha, said her team has weathered the storm and significantly trimmed the debt overhang. In a first ever media interview, Hegde told ET’s KR Balasubramanyam, that her focus is on striking strategic alliances to widen product portfolio and drive revenue growth. Edited excerpts:

Q: What is your outlook on the future of the Coffee Day group?
A: My husband VG Siddhartha had built Coffee Day with a lot of passion, and when the tragedy struck us in July 2019, the scenario looked extremely bleak with complex issues including huge debts. The very existence of Coffee Day was under threat. My main reason for coming here was to pay back the debts.

I was able to instill some sense of confidence in the team with the help of board members and senior management. Once I was part of the organisation, I realised its inherent strengths.

Most lenders and creditors waited patiently, while our employees braved the crisis like a rock. We hope to be an example of Atmanirbhar Bharat that the prime minister has been campaigning for.

Q: What is the latest on the company’s debt position?
A: We are taking the right steps to keep the company financially healthy. We have brought down the debt to Rs 3,100 crore as on March 31, 2020, from Rs 7,200 crore in March 2019, without a single rupee of haircut from lenders.

Q: When do you expect CDEL shares to resume trading on the exchanges?
A: Due to the investigation and Covid-19, the auditors could not complete the audits for a considerable length of time. This delayed meeting the timelines with regulators and exchanges. We have complied with all regulatory requirements and expect the trading to resume soon.

Q: CDEL’s net revenue dropped by over a quarter last financial year compared with 2018-19. What does this year look like?
A: The drop in revenue last year was mainly due to liquidity issues in coffee and logistics businesses. We believe 2020-21 will be a much more positive year.

Q: Are you working on new ideas to increase revenue?
A: Vending and cafe are our two major verticals. We are strengthening our café chain through strategic alliances especially with food chains by expanding our food & beverage (F&B) portfolio. This will help us to get a new set of customers into our cafes. We are also launching a range of products such as coffee powders, coffee equipment, coffee merchandise etc.

We see a huge potential in our vending business. We have also tied up with Flipkart in a small way. Our goal is to reach 1.5 lakh machines in the next few years.

Q: What is the update on the tie up with the London Bubble Co to set up waffle- points within your outlets?
A: The attempt is to offer a wider choice of product portfolio to our customers that gels well with our beverages. We will keep exploring such alliances which fit well with our brand.

Q: There are reports of talks between CDEL and the Tata Group on selling vending business? Is there a mismatch in the valuation you are expecting and what the Tatas are offering?
A: We are in talks with multiple investors. I cannot offer a comment now.

Q: How bad is the impact of Covid-19 on your café and vending business?
A: The pandemic did come as a big blow. But we made our café network more productive. As a result, about 90% of our network is operational and we have already crossed 80% in recovery. As for vending, more than half of our vending machines are functional compared to pre-Covid times. Orders for new machines are also picking up. Verticals like manufacturing, government and some segments of retail are showing better traction than earlier times.

Q: CDEL has either exited or is exiting non-core businesses. Which are the main business segments in the coffee business you are bullish about?
A: I am bullish on both the cafe and vending businesses. Both businesses will need to pass a few more hurdles before they flourish.

Q: What is the status of your capital raising plans?
A: We would not like to comment at this point of time.

Q: What is the situation with regard to working capital?
A: I cannot say we are comfortable, but we have survived our worst days, including the Covid-induced lockdown. We have right-sized our business to manage our day-to-day operations.

Q: What is the update on sale of CDEL’s stake in Sical Logistics?
A: There are players interested in buying Sical. We are hopeful that something positive will happen before the end of this financial year.

Q: Where do you draw inspiration from as a business leader?
A: Each day in this office is dedicated to my husband’s dream. He founded the group with the goal of providing value to coffee growers, jobs to non-graduates and a whole new coffee experience to our customers. I hope Coffee Day grows from strength to strength and reaches every high street in the world.

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