Cafe Coffee Day to branch out into tax havens

The Rs 250 crore Amalgamated Bean Coffee Trading Company Ltd (ABCTCL) will be setting up a subsidiary in one of the tax-haven countries to take its Cafe Coffee Day division overseas.

Speaking to the media in Bangalore on Thursday, Cafe Coffee Day director Naresh Malhotra said: "We should be setting up the subsidiary in either Cyprus, Mauritius, Singapore or Dubai to take maximum advantage of the tax benefits these countries will offer. The decision should be firmed up in another month's time."

Cafe Coffee Day will take its coffee bars to at least 10 countries in the first quarter of the next fiscal and is looking at raising this number to 50 next fiscal.

Malhotra said setting up an outlet in the US is around 50 per cent less than the Rs 25 lakh cost in India. Explaining the reason behind this, he said that as equipment for the coffee bar is imported to India.

If they are manufactured overseas, the company can avoid the import duty. In addition to this, the real estate on hire or lease is much more cost-effective than renting in India as in foreign countries there is no concept of deposit for rentals.

Cafe Coffee Day will leverage its brand recognition which it has through its coffee exports in other countries.

The division, which has a turnover of Rs 70 crore and is operational break-even, is planning to have a total of 180 cafes by March 2004 from the current 135 cafes in 33 cities.