After news emerged of VG Siddhartha, the founder of Coffee Day Enterprises and son-in-law of BJP leader SM Krishna, having gone missing in Mangaluru, the stock of the coffee chain major plunged over 20% as it opened for trading on Monday. Siddhartha is the chairman and managing director of Coffee Day Enterprises.
Even as search efforts are on, Coffee Day Enterprises shares were trading at Rs 153.40 as of 9.38 am.
In a regulatory filing, the company informed the stock exchanges that Siddhartha was missing.
“This is to inform you that, Mr. VG Siddhartha, Chairman and Managing Director of Coffee Day Enterprises Limited has not reachable since yesterday evening. We are taking the help of concerned authorities. Company is professionally managed and led by competent leadership team, which will ensure continuity of business, (sic)” the company secretary wrote.
V G Siddhartha, son-in-law of BJP leader and former CM of Karnataka S M Krishna has been reported missing since Monday. Police officials have launched a probe into his disappearance.
Siddhartha got out of his car near a bridge across the Nethravathi river in Mangaluru. His driver panicked when he did not return in an hour, and informed the family. The Dakshina Kannada police have been searching for Siddhartha since last night.
On Monday, a letter purportedly written by Siddhartha addressed to the Board of Directors emerged where he blamed himself for failing as an entrepreneur and said that he failed to create the right profitable business model despite his best efforts. While the authenticity of the letter is yet to be ascertained, it goes on to note that he was under tremendous pressure from lenders.
The first CCD outlet was opened in 1996 and since then, the popular coffee chain has grown to 1,750 stores across India and has 60,000 vending machines. Outside of India, it has a presence in Austria, the Czech Republic, Malaysia, Nepal and Egypt.
As on March 31, 2019, the total debt of Coffee Day Enterprises stood at Rs 6,547 crore, which is nearly 2.5 times the net worth of Rs 2,529 crore.
Apart from coffee retailing, the Coffee Day Group has dealings in logistics, technology parks (SEZ and STP scheme), financial services and investments in technology and software companies.
Early signs of VG Siddhartha desperately looking to pare down debt started with him looking to sell his stake in Mindtree. Siddhartha was one of the earliest investors of Mindtree and held 20.42% stake. Reports at the time suggested that he was looking to sell this stake to pay back Rs 300 crore to income tax authorities.
In March, Siddhartha made about Rs 3,200 crore by selling the 20.32% stake held by him and two CCD affiliate firms (Coffee Day Enterprises Ltd and Coffee Day Trading Ltd) in software services company Mindtree Ltd to Larsen and Toubro Ltd (L&T).
After this, there were media reports that Coffee Day was in talks to sell a substantial stake to beverage giant Coca Cola and was eyeing a valuation of Rs 8,000 to Rs 10,000 crore from the stake sale.
In September 2017, the Income Tax department had conducted a search-and-seize operation at 25 locations of CCD and its group companies in Karnataka, Mumbai and Chennai. The I-T department had then stated that Siddhartha had concealed an income amounting to over Rs 650 crore. The officials were looking into a number of violations of various statutes and had said that they had found ample evidence of concealed income.