Mutual funds’ exposure to Coffee Day Enterprises, whose founder VG Siddhartha has recently been reported dead, is close to Rs 200 crore including debt and equity, according to data compiled from Morningstar India.
VG Siddhartha, the founder of the Cafe Coffee Day (CCD), went missing amid speculation about rising debt obligations. His body was found early July 31, police said and is suspected to have committed suicide.
The stock has overall lost 37% in 2 days. The market capitalization has reduced to Rs 2,603.68 crore from Rs 3,254.33 crore on Tuesday. On Monday, the market capitalization of Coffee Day Enterprises stood at Rs 4067.65 crore, prior to reports of Siddhartha going missing. The stock of Coffee Day has fallen over 50% in the last 6 months and over 38% in a week on both the bourses.
Impact on Mutual Funds
a. Equity Mutual Funds
Canara Robeco Small Cap Fund has an exposure of almost Rs 5.7 crore, while ICICI Prudential S&P BSE 500 ETF has a marginal exposure of Rs 1 lakh.
b. Debt Mutual Funds
While industry officials say that there doesn’t seem to be a major impact immediately, but some fund houses may need a top-up of equity cover following the 20 percent fall in share prices of Coffee Day Enterprises. In some of the exposures, promoter shares in Coffee Day have been placed as collateral.
However, exposure of MFs to Coffee Day group entities has reduced in recent months.
At the end of March 31, 2019, these fund houses exposure to these entities was Rs 284 crore. Fund managers don’t expect repayment getting impacted. “The group companies are professionally-managed. Yes Siddhartha has been a key part of Coffee Day, but we expect the repayments to stay on track,” said a fund manager exposed to one of the group entities.
“One of the companies has already prepaid some of the loans and is expected to settle most of the dues earlier than scheduled maturity of the debentures,” said another fund manager.