Coffee Day’s resorts in Karnataka, Andaman attract buyer interest

P. Manoj | | Updated on: Jan 02, 2020
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Company looking to exit business as part of revamp efforts to pare debt

Coffee Day Hotels & Resorts Pvt Ltd, a wholly-owned unit of Coffee Day Enterprises Ltd that runs three luxury resorts in Karnataka and one in Andaman and Nicobar, has attracted interest from a few mid-sized hotel operators as the group eyes asset sales to pare debt.

Mumbai-based JM Baxi Group is also understood to be among those keen on the resort properties.

Coffee Day Enterprises is in the midst of being restructured, with several of its businesses being divested or spun off. While entities such as Sical Logistics, Café Coffee Day stores and real estate arm Tanglin are seeing some level of rejig activity, other lesser-known entities of the group are yet to see suitable restructuring.

The group has mandated IDFC Securities and ICICI Securities to scout for buyers and some of the lenders, too, are making efforts to help the company find suitors for its luxury resort business.

Its first luxury resort, The Serai in Karnataka’s Chikmagalur district, is nestled amidst a newly planted coffee estate. The company added two more luxury resort properties — one in the wildlife environs of Bandipur National Park and the other by the serene Kabini river — when it acquired adventure lodge operator CICADA.

In 2014, Coffee Day Hotels & Resorts acquired a significant minority stake in the Barefoot resort at Havelock, in the Andamans.

Discussions held

“The company management and various lenders have been in discussions on and off for seeking an exit from this enterprise,” a person briefed on the discussions said. “It is understood that a few companies have expressed interest in making an acquisition. While some existing mid-sized hotel operators have expressed interest, organisations such as the JM Baxi group have also evinced interest.”

JM Baxi did not respond to a request for comment.

Due to high capex and operating costs, the company is only marginally profitable, while the Barefoot resort stake has had severe impairment with the company battling multiple land-related lawsuits, Foreign Investment Promotion Board (FIPB) violation allegations and change of government rules on dive boat operations, the person mentioned earlier said.

“Coffee Day Hotels & Resorts appears to have become non-core to the Coffee Day Group operations with the group’s senior executives doubling up as management for the subsidiary company. It looks like this transaction may be getting traction,” the person added.

Coffee Day Group could not be reached immediately for comment.


Published on January 02, 2020

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