V G Siddhartha, the founder of India’s largest coffee chain, Café Coffee Day (CCD), went missing on Monday night en route to the coastal Karnataka city of Mangaluru, with a letter purportedly written by him showing he was under “tremendous pressure” from lenders and one of the private equity partners (PEs). The letter also alleged “a lot of harassment” from the tax authorities.
A massive search operation involving teams of the National Disaster Response Force (NDRF), Coast Guard, Home Guard, fire services and coastal police continued throughout Tuesday, but didn’t yield any result. Search teams scoured the waters under a bridge across the swollen Nethravathi river near Mangaluru where the 60-year-old businessman was reportedly last seen.
Shares of Coffee Day Enterprises, which runs the CCD chain, dropped 20 per cent on Tuesday, eroding Rs 813 crore from its market valuation. The stock tumbled 19.99 per cent to Rs 154.05, its 52-week low, on the BSE.
The board of directors of Coffee Day Enterprises held an emergency meeting on Tuesday, seeking to calm investors. It said it was assessing the situation in the wake of the disappearance of its founder and chairman, and formulating appropriate steps to ensure business operations remained unaffected. The board is scheduled to meet again on Wednesday to appoint an interim chairman in the absence of Siddhartha, highly placed sources said.
“There will be a board meet tomorrow. Two of Coffee Day’s board members — Sanjay Omprakash Nayar and Sulakshana Raghavan who are in Mumbai — will come down to Bengaluru. Albert Hieronimus will join in from Germany through audio,” a source said.
“The ship has to be steered home. It’s about around 40,000 employees, more than 75,000 investors and other stakeholders,” the source added.
The board admitted on Tuesday that Siddhartha had written a letter about his ongoing predicaments regarding the liquidity crisis and alleged high-handedness of the income-tax (I-T) department, among others. In that letter, Siddhartha had taken full responsibility for the trouble faced by the group. The letter also detailed the assets of the group, though it remained silent about the liabilities and his personal financial transactions.
While several theories are doing the round with regard to Siddhartha’s disappearance, including a possible case of suicide or kidnaping, an eyewitness has told local television channels that he saw someone jumping into the river from the bridge, but couldn’t render any help owing to intense currents.
Senior Congress leader and former state minister D K Shivkumar said, “This incident is hard to believe. I've asked for an investigation. We don't know if he is missing or someone has taken him away.”
Siddhartha had left from Bengaluru for Sakleshpur in Hassan district in a car on Monday afternoon, but on the way he asked his driver to go towards Mangaluru, the police said. On reaching the Nethravathi river bridge, he alighted from the car and told the driver that he was going for a walk. “He (Siddhartha) asked the driver to wait till his arrival. When he did not return even after two hours, the driver approached the police and lodged a missing complaint,” Deputy Commissioner of Dakshina Kannada district Senthil Sasikant Senthil told PTI.
In the letter, Siddhartha claimed that the company had faced harassment from the previous director general of income tax, who had allegedly attached Mindtree shares twice to scuttle its sale deal. “(The I-T Department) has taken position of our Coffee Day shares, although the revised returns have been filed by us. This was very unfair and has led to a serious liquidity crunch”. It also said that one of the PE partners was forcing him to buy back shares which he had part-complied “by borrowing a large sum of money from a friend”.
The I-T department, however, strongly refuted the allegations of harassment. It also cast doubts over Siddhartha’s signature used in the document.
The disappearance also led to clarifications from some financial institutions about their current exposure. Housing finance major HDFC said it didn't have any exposure to Coffee Day Enterprises as of date, as Tanglin Developments, one of the subsidiaries of the Coffee Day group, had repaid all outstanding dues in January. Karnataka Bank said its present outstanding to Coffee Day Global stood at around Rs 153 crore. Similarly, private equity major KKR said it continued to hold about 6 per cent in the company, down from around 10 per cent earlier. Another PE major Standard Chartered PE said in a statement that it continued to hold 5.7 per cent in the company.