Authorities in Southern India recovered the body of coffee baron V.G. Siddhartha floating in a river on Wednesday, two days after his disappearance sparked speculation that he was under intense financial strain.
The recovery of Siddhartha’s body unnerved investors in his flagship listed Coffee Day Enterprises Ltd and sent its shares plunging to an all-time low on Wednesday.
Coffee Day Enterprises held an emergency board meeting on Wednesday and named independent board member S.V. Ranganath as interim chairman. The company has also set up a committee that will be vested with the powers of the chief executive and they will explore opportunities to deleverage the Coffee Day Group.
A letter, purportedly written by Siddhartha and addressed to his board and employees, said he “gave up,” blaming an unnamed private equity partner for pressuring him into a share buyback and tax authorities for “harassment” and decisions that caused a liquidity crunch.
Siddhartha’s letter also mentioned hidden transactions that even auditors and senior managers were unaware of. Reuters was not able to confirm the authenticity of the letter, which was available on social media and published by local media.
While the authenticity of the letter has still not been verified, the board has taken serious note of its contents and will thoroughly investigate the matter, the company said.
Shares in Coffee Day hit their lower limit for the trading day and plunged 20% to a fresh all-time low of 122.75 rupees on Wednesday, fresh off the back of another 20% slide on Tuesday.
“I think the company, its brand, its franchise has value, if it gets sold to an external buyer,” said Deepak Jasani, a senior vice-president at HDFC Securities. “A lot will depend on whether and when the board or top management takes a call on selling the business or not.”
An employee prepares coffee for customers at a Cafe Coffee Day outlet in Mumbai, India. (Reuters)
India’s opposition parties seized on the letter, accusing Prime Minister Narendra Modi’s administration of spooking businesses with heavy-handed tactics.
“His is the ugliest example of how agency persecution is wrecking India’s growth story,” tweeted Congress politician Milind Deora. “Hope govt reflects on its anti-business policies!”
The government did not immediately respond to a request for a comment on the allegations made by the opposition.
The Income Tax department issued a statement on Tuesday saying Siddhartha had failed to disclose some income, and it stressed that authorities’ actions were normal.