Mutual funds' exposure to Coffee Day Natural Resources stood at Rs 192 cr

At the end of June, 2019, mutual funds’ exposure to Coffee Day Natural Resources (CDNL) stood at Rs 192 crore, according to data from Value Research. BOI AXA MF had Rs 16 crore of exposure; largely in its short term income fund, while its credit risk fund was marginally exposed. 

Meanwhile, DSP had exposure of Rs 132 crore through its credit risk fund. Indiabulls AMC had exposure of Rs 44 crore to Tanglin Development as on June 28, 2019. The latter is a developer of technology parks in Bengaluru and Mangaluru. It is a wholly-owned subsidiary of Coffee Day Enterprises.  

While industry officials say that there doesn’t seem to be a major impact immediately, but some fund houses may need top-up of equity cover following the 20 per cent 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.