CCD to probe VG Siddhartha’s off-record transactions

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Updated: August 1, 2019 7:15:47 AM

The management will investigate the transactions mentioned by Siddhartha in his letter, although it was unclear whether these relate to the company or his personal finances.

India Inc mourned the death of Siddhartha even as it expressed concern at the harassment by tax officials.

SV Ranganath was on Wednesday appointed interim chairman of Coffee Day Enterprises (CDEL), following confirmation of the demise of founder VG Siddhartha.

Nitin Bagmane, chairman of Tanglin, took charge as interim chief operating officer.

The company informed the stock exchanges that it had taken cognizance of the statements in the letter purportedly written by Siddhartha, relating to financial transactions which he said the senior management, auditors and the board were unaware of.

Meanwhile, India Inc mourned the death of Siddhartha even as it expressed concern at the harassment by tax officials.

Corporate chieftains and experts pointed out it was important for entrepreneurs to take measured risks and be prepared for downturns. Some felt it should be made mandatory for investments by private equity (PE) players to be disclosed. “Given many of these are not pure equity deals but structured transactions including debt, investors need to know about them,” one expert said.

HP Ranina, tax expert, observed that tax matters needed to be resolved speedily and not drag on for years.

Deepak Parekh, chairman, HDFC, described the CCD founder as a visionary who knew the pulse of millenials and had built a good brand.

Rajiv Bajaj, managing director, Bajaj Auto, said on a television channel, “no well-intentioned man or his family deserved this”.

Harsh Mariwala, chairman, Marico, noted on a television channel that it was the board’s responsibility to drive corporate governance and the quality of the board, and the audit committee and audiors was important.

Siddhartha’s letter dated July 27 said: “I fought for a long time but today I gave up as I could not take any more pressure from one of the private equity partners forcing me to buy back shares, a transaction I had partially completed six months ago by borrowing a large sum of money from a friend. Tremendous pressure from other lenders lead to me succumbing to the situation. 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 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.”

The management will investigate the transactions mentioned by Siddhartha in his letter, although it was unclear whether these relate to the company or his personal finances. A committee comprising Ranganath, Bagmane and R Ram Mohan, chief financial officer, was constituted to exercise powers earlier vested with the CEO and the administrative committee constituted in 2015. The commitee will explore opportunities to deleverage the group.

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