Cafe Coffee Day, one of the leading cafe chains in India, on Tuesday sought to allay concerns over business continuity after founder and MD VG Siddhartha went missing, even as a letter written by Siddhartha surfaced, admitting withholding information and wrong business decisions. “I have failed to create the right profitable business model despite my best efforts,” VG Siddhartha said in the letter dated 27 July 2019, released by news agency ANI. Financial Express Online has not independently verified the authenticity of the letter.
In a shocking revelation, CCD founder VG Siddhartha admitted to turbulence in business, talking about the enormous pressure that he faced from lenders that made him “succumb to the situation”. According to the letter, one of the private equity partners of the company forced VG Siddhartha to buy back shares, which, he said, he partially completed six months ago after taking a large loan from a friend.
VG Siddhartha has also alleged harassment from previous DG income tax pertaining to blocking the Mindtree deal and then taking Cafe Coffee Day shares. “This was very unfair and has led to a serious liquidity crunch,” VG Siddhartha said in the letter. VG Siddhartha was recently in the news for selling his stake in software services firm Mindtree to L&T, evoking a lot of resistance from other promoter shareholders.
Founder & owner, Cafe Coffee Day (CCD), #VGSiddhartha‘s letter to employees and board of directors of CCD, states, “Every financial transaction is my responsibility…the law should hold me & only me accountable.”; He has gone missing from Mangaluru, search operation underway. pic.twitter.com/0GJc5vmvYt
— ANI (@ANI) July 30, 2019
Further, VG Siddhartha also said in the letter that he withheld the information from everyone. “I am solely responsible for all mistakes. Every financial transaction is my responsibility,” VG Siddhartha said, adding: “My team, auditors and senior management are totally unaware of all my transactions. The law should hold me and only me accountable.”
Meanwhile, Cafe Coffee Day said that the company will continue the business, while confirming that VG Siddhartha has been unreachable since Monday evening. While the company has sought relevant authorities for help, CCD “is professionally managed and led by a competent leadership team, which will ensure continuity of business,” the cafe chain said in a BSE filing.
According to reports, VG Siddhartha went for a walk near the Southern Indian city of Mangaluru while he asked his driver to keep moving. The perplexed driver then called the family after he could not reach Siddhartha over the phone. A team of police and revenue authorities along with expert swimmers are conducting search operations in the river on the assumption that he may have taken the extreme step of taking his life. The first generation entrepreneur started the Cafe Coffee Day’s first outlet in Bangalore’s Brigade Road in 1996.
Coffee Day Enterprises (which runs the Cafe Coffee Day franchise) shares fell 20% on Tuesday morning to hit a new 52-week low of Rs 154.05 on BSE. The shares were locked in at the lower circuit.