Barista on the block again
Coffee chain struggles to find new buyers
Bengaluru/New Delhi : A year after Delhi-based Carnation Hospitality Pvt. Ltd bought Barista for a reported ₹ 100 crore, the loss-making coffee chain is on the block again, according to two people familiar with the development.
If a deal goes through, this will be the fourth time Barista, which started serving coffee to Indians beginning 2000, changes hands. The news was first reported by The Economic Times on Wednesday.
Carnation Hospitality, a unit of packaging and food services company Rollatainers Ltd owned by auto-parts manufacturer Amtek Group, acquired 100% of Barista in August last year. The deal included 190 Barista outlets, apart from its business in the United Arab Emirates, Sri Lanka, Nepal, Bangladesh and Myanmar.
There are few suitors for the struggling business that is “looking to exit at cost," said a banker, one of the two persons cited above, on condition of anonymity. The purchase could cost ₹ 70-75 crore.
“The coffee chain has been on the block for quite some time (ever since the chain changed hands), yet there are no takers," added a second banker, who too did not wish to be identified.
Amtek Auto promoter Arvind Dham did not answer multiple phone calls made to him.
The move comes at a time when the country’s largest coffee chain Café Coffee Day made a tepid debut on the stock market early this week. R.J Corp., the Indian partner of European coffee chain Costa Coffee, too was earlier looking to exit the business, but the two companies have decided to stick together after scaling back outlets over the past 18 months.
India remains a tea-drinking nation, while coffee remains a largely urban phenomenon. International chains such as Starbucks and Costa Coffee have rapidly expanded in the market, posing stiff competition to existing chains.
In 2001, Tata Coffee Ltd bought 34.3% stake in the company, with C. Sivasankaran of Chennai-based Sterling Infotech Group purchasing the remaining 65%. In 2007, Italian coffee roasting company Lavazza bought Barista along with the Fresh and Honest coffee-vending machine business from Sivasankaran. In 2014, Delhi-based Carnation acquired it to diversify its business from auto component manufacturing.
The second banker quoted above added that there are currently no new negotiations on the cards for the chain.
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