Due to high repayment obligations in the near to medium term, the group is exposed to refinancing risk.

ICRA has downgraded the long-term rating assigned to Rs 315 crore term loans of Coffee Day Enterprises Ltd (CDEL) to "D" with negative outlook from "BB plus".

The rating action follows the delay in debt servicing by CDEL's flagship subsidiary Coffee Day Global Limited and Sical group of companies.

Coffee Day Global Ltd, the flagship subsidiary of CDEL, has delayed in debt servicing for the month of August, said ICRA. Further, the Sical group of companies, which are part of the Coffee Day group have also witnessed delays in debt servicing.

The delays can be attributed to the weakened liquidity position of the group following the unexpected demise of promoter VG Siddhartha, which has led to reduced financial flexibility and enhanced refinancing risks for the group.

Due to high repayment obligations in the near to medium term, the group is exposed to refinancing risk.

The financial profile of the consolidated entity is characterised by leveraged capital structure and stretched debt protection metrics due to large debt-funded capex incurred under coffee, logistics, and real estate businesses.

The consolidated entity had gearing of 2.4 times as on March 31 (total debt of Rs 7,653 crore), increased sharply from 1.7 times as on March 31 last year.

However, said ICRA, subsequently there has been some reduction in consolidated debt by Rs 2,100 crore raised from stake sale in Mindtree Ltd.