The shares of the Coffee Day Enterprise limited fell by 20% to Rs.123.25.
The death of VG Siddhartha, Founder of Café Coffee Day under mysterious circumstances has shaken the business world substantially. While the body has been recovered and the last rites are about to be performed, market shares of the renowned coffee chain has already hit the lowest allowed trading limit.
After the media reported the news of Siddhartha’s missing, the shares of the Coffee Day Enterprise limited fell by 20% on Tuesday and another 20% on Wednesday to Rs.123.25, its 52-week low.. Altogether, the shares of the company fell by 36.27% in two days. At the NSE the shares of Coffee Day Enterprise Limited fell by 20% to Rs.122.75. The current market capitalisation stands at Rs. 2603.67 crore. That got reduced sharply from Rs. 7690.6 crore in January.
The coffee czar reportedly chose to end his own life and before doing so he penned down a note where he said, “ I gave it my all, I am sorry to let down all the people that put that trust in me.” The note further stated, "there was a lot of harassment from the previous DG Income tax in the form of attaching our shares on two separate occasions to block our Mindtree deal and then taking the 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.”
Today, two fishermen spotted the dead body of VG Siddhartha on the banks of Netravati river, Mangaluru. Siddhartha’s driver told that while Siddhartha asked him to stop the car on the bridge over Netravati River. He got off from the car and asked his driver to wait at another end of the bridge. He then walked towards the bridge and never returned.
Commenting on Siddhartha’s allegations, however, the Karnatka Income Tax Department refuted the same levelled against the IT department by the business tycoon. Questioning the authenticity of the letter, the income tax said that Siddhartha’s signature on the note does not match with the one on his company’s annual report.
Son of a coffee plantation worker, Siddhartha opened the first café coffee day outlet in Bengaluru way back in 1994 with a tag line ‘a lot can happen over a cup of coffee.’
Coffee Day Enterprises was under a debt of around Rs. 6,550 crore as on March 2019. However, the debt level of the entity had drastically come down after its stake sale in Mindtree to engineering giant L&T. From just one outlet to expanding the network of 1750 cafés in more than 200 cities spanning across India and beyond, the coffee chain had come a long way.
The group's coffee business, which includes some exports of the bean, reported revenue of Rs 1,777 crore in FY18 and Rs 1,814 crore in FY19. The annual result of the company for the year 2018-2019 mentioned that the gross debt of the company stands at a whopping Rs. 5049 crore.
Later, Siddhartha went on to diversify his business portfolio, venturing into the Information Technology (IT) and finance domain. He founded two more organisations viz., Global Technology Ventures and Sivan Securities.
A letter by him to the CCD Board claimed that he was being pressured by "one of the private equity partners" forcing him to buy back shares, a transaction he had partially completed six months ago by borrowing a large sum of money from "a friend".
Amidst all the crisis unfolding, the coffee chain appointed SV Ranganath as interim chairperson of the board and Nitin Bagmane as interim chief executive officer of Café Coffee Day.