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Amtek Group seeks buyer for loss-making Barista Coffee chain

Published 05 November 2015

India-based components manufacturer Amtek Group, which bought Barista Coffee chain a year ago, is looking to sell the coffee chain as its loss making spree continues.

Barista

In order to find a buyer, Amtek may seek consultancy firm Grant Thornton, although the latter has not been signed on yet.

One of the persons familiar with the development was quoted by The Economic Times as saying: "The deal could also be structured in a way that the Arvind Dham-promoted Amtek Auto could liquidate about a third in Carnation Hospitality, which manages Amtek's food business."

Arvind Dham had recently decided to sell the group's non-core assets and to depart from the non-auto businesses. The decision came after it was found that the group had defaulted on repayment of Rs 8bn ($121m).

Amtek Group is Barista's fourth owner, which is one among the oldest private coffee chains in India and has been struggling to make profits since a couple of years.

Carnation Hospitality, a unit of packaging and food services company Rollatainers owned by auto-parts manufacturer Amtek Group, had acquired Barista in August 2014. The deal included acquisition of 190 Barista outlets, along with its businesses in the UAE, Sri Lanka, Nepal, Bangladesh and Myanmar, Livemint reported.

Barista's 170-odd coffee stores are making losses, but in terms of store count, it continues to be the second largest coffee chain after Café Coffee Day, which made a tepid debut on the stock market recently.

In 2001, Tata Coffee purchased 34.3% stake in the company, with C. Sivasankaran of Chennai-based Sterling Infotech Group buying the remaining 65%, Livemint reported.

In 2007, Italian coffee roasting company Lavazza acquired Barista. At the same time, Lavazza bought the Fresh and Honest coffee-vending machine business from Sivasankaran. In 2014, Delhi-based Carnation acquired Barista to branch out its business from auto parts manufacturing.

The Indian coffee industry seems to be struggling with most Indians preferring tea over coffee and coffee continues to remain predominantly an urban phenomenon. With the advent of international chains such as Starbucks and Costa Coffee a couple of years ago, existing chains have since been facing stiff competition, reported Livemint.


Image: Barista continues to make losses. Photo: Courtesy of amenic181/FreeDigitalphotos.net.