Capital market regulator SEBI has sought clarification on the draft red herring prospectus (DRHP) filed by Coffee Day Enterprises Limited (CDEL). The Bangalore based company, parent of Cafe Coffee Day chain of restaurants, had filed its prospectus with the regulator last month for an IPO worth INR1,150 crore through lead manager Axis Capital.
SEBI has not mentioned what details it is looking for but said it has written a letter to lead manager seeking clarifications on its website.
SEBI said that it might issue observations on Coffee Day Enterprises’ IPO document within 30 days from the date of receipt of satisfactory reply from the lead merchant bankers to the clarification or additional information sought.
Use of funds
Out of the INR1,150 crore, CDEL plans to use INR632.8 crore towards repayment of loans while INR87.7 crore will be used for expansion of its retail network. Included in its expansion plans are 216 new outlets and 105 Coffee Day Xpress kiosks by FY 2016/17. Another INR97.3 crore will be invested in manufacturing and assembling of vending machines. The company has also earmarked INR60.6 crore for refurbishment of existing outlets and vending machines while setting-up of a new coffee roasting plant near its existing facility in Chikkamagaluru will involve INR41.9 crore.
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After opening its first Cafe Coffee Day outlet in 1996, the group has been consistently expanding its footprint which stood at 1,472 outlets across 209 cities as on December 2014. While this may not come across as large enough for a big country like India, Cafe Coffee Day’s market share of 46% puts things in perspective.
CDEL said its IPO will not involve sales of shares from existing investors. The company counts a number of high-profile investors including Infosys co-founder Nandan Nilekani, private equity player KKR, investor Rakesh Jhunjhunwala’s Rare Enterprises and stock broker Ramesh Damani.