Image Source: CNBC TV18
Coffee Day Enterprises Ltd (CDEL) said that its wholly-owned subsidiary will sell its holding in Magnasoft Consulting India Pvt Ltd for the total consideration of ₹235.7 million. The step is aligned with the company's strategy to tap into its non-core assets, pare debt, and rationalize its business portfolio at a time when the financial environment is tough.
Stake Sale in Magnasoft Consulting:
Coffee Day Enterprises' unit will sell its stakeholding in Magnasoft Consulting India Pvt Ltd, which is a Bengaluru technology and GIS consulting company, for ₹235.7 million. Magnasoft provides services in 3D laser scanning, GIS mapping, and software services to international clients.
Debt Reduction Focus:
The transaction proceeds will be used for the repayment of debts, following CDEL's recent drive towards deleveraging its balance sheet. The company has been aggressively disposing of assets-including real estate and interests in subsidiaries-to service its debt and re-establish financial stability.
Recent Asset Monetization Moves
During the last year, CDEL has sold some major assets, such as the sale of a sizeable property in Mangalore and disposal of pledged shares in Coffee Day Global, that decreased dues owed to lenders. It also settled with IDBI Trusteeship through the sale of pledged shares against a ₹205 crore dues.
Financial Performance Context:
For FY24, Coffee Day Enterprises reported a 9.6% increase in consolidated net revenue to ₹10.13 billion, even as it continues to report losses at the group level while it undertakes restructuring and asset dispositions. The company is committed to meeting its obligations and building long-term value for stakeholders.
Strategic Streamlining:
The sale of Magnasoft shares is one part of a larger strategy to restructure around core businesses, like the Café Coffee Day retail chain, and divest non-core investments in order to enhance liquidity and operational intensity.
Insight
Sale of Magnasoft Consulting shares for ₹235.7 million is another forceful move in the asset-light, debt-reduction strategy of Coffee Day Enterprises' turnaround strategy. Through sale of non-core assets and allocation of proceeds toward repayment of debt, CDEL is attempting to stabilize its finances as well as prepare itself for a more sustainable future. Investors and stakeholders will keep a keen eye as the company proceeds with its asset-light, debt-reduction strategy.
Source: India Infoline Directors' Report, MarketScreener Company Profile, Business Today (March 2025)
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