BENGALURU: Tata Consumer Products’ (TCPL) Rs 1,000 crore offer to buy Coffee Day Enterprises’ (CDEL) coffee vending machines has hit another roadblock—the valuation of the business hasn’t gone down well with the promoters, according to sources privy to the development.
Tata group, they say, has offered to buy the vending machines for only half of what CDEL is seeking. The Tatas are also eyeing a stake in the Coffee Day’s retail outlets in order to pump up its tea and coffee brands and strengthen Tata Starbucks.
Sources said that although the Tatas’ offer was also for buying the plantation, retail, and vending machines businesses, there was also a lot of ambiguity over the valuation of each one. CDEL has been able to narrow its losses as well as pare debt down to Rs 3, 200 crore with the sale of Global Tech Park to Blackstone.
“Another concern is that the Coffee Day’s retail business was already hit hard prior to Covid and the subsequent lockdowns have only hurt them and will bring down the valuation. Tata’s offer to buy their vending machines business for Rs 1,000 crore is currently on hold although the talks are going on and this may close in next few weeks,” a source said.
CDEL on Friday told the stock exchanges that its revenue for Q2FY21 was down by 67% whereas EBITDA was down by 54% YoY. However, net losses have come down by 48%to Rs 92 crore Rs 230 crore during the same quarter a year ago. For Q2, FY21 ( July-September), The company had told the stock exchanges that now, nearly 80% of its outlets and 50% of the vending machines are functional.
CDEL also said there has been a change in the shareholding of the company in two of its subsidiaries and one step-down subsidiary as of September 30, 2020 due to invocation of shares by thelenders of the subsidiaries. It added that the changes are temporary.