Following the death of Cafe Coffee Day Group founder V G Siddhartha, Coffee Day Enterprises Ltd today appointed SV Ranganath as the company’s interim chairman. The company also announced that its board has initiated a probe into past transactions made by the company and Siddhartha. This comes in the backdrop of certain allegations made by Siddhartha in a purported letter to the company's board before his sudden demise in an alleged suicide attempt.
Following a board meeting, Ranganath, who has been a non-executive independent director at Coffee Day Enterprises, was appointed as the interim chairman and Nitin Bagmane as the company’s interim chief operating officer. Bagmane is a director on the board of Tanglin Developments Ltd, a subsidiary of Coffee Day Enterprises.
The company’s board also decided to constitute an executive committee comprising Ranganath, Bagmane and R. Ram Mohan (CFO of Coffee Day Enterprises) to jointly exercise the powers previously vested with the CEO (Siddhartha) and the administrative committee of the company’s board in 2015.
The company said its board will soon prepare a detailed charter of authorities vested in the executive committee and approve the same.
In a purported letter by Siddhartha, it was mentioned that CCD was in talks with Coca Cola and ITC to explore a potential “operational partnership". Following Wednesday’s board meeting, the company said the executive committee will explore opportunities to deleverage the Coffee Day Group.
Siddhartha allegedly wrote in his last letter to the board that he succumbed to the tremendous pressure from lenders and some private equity players. He also mentioned that there were certain transactions of which no one in the company or his family was aware of. Further, in the letter, he alleged harassment by certain income tax department officials. The I-T department attached his shares in Coffee Day Enterprises, which resulted in a serious liquidity crunch for the firm.
“The board took cognizance of statements in the purported letter from V. G. Siddhartha relating to financial transactions outside the knowledge of the senior management, auditors and the board. While the authenticity of the letter is unverified and it is unclear whether these statements pertain to the company or the personal holdings of V. G. Siddhartha, the board took serious note of the same and resolved to thoroughly investigate this matter," said the company after the board meeting.
The company said the audit committee and executive committee will engage in discussions with the statutory auditors and such other advisors with a view to recommend appropriate next steps to the board at its forthcoming meeting on 8 August.
The board has also appointed Cyril Amarchand Mangaldas as its legal counsel to advise it on the foregoing and related matters.
On Wednesday morning Siddhartha’s body was found near the south bank of Karnataka’s Netravati river after Siddhartha allegedly jumped off a bridge over the river.
The company’s board said it will remember Siddhartha for his matchless energy, vision and business acumen which helped to single-handedly build the company.
The board also took note of a message from Malavika Hegde (widow of Siddhartha and a director on the board of Coffee Day Enterprises), expressing support and trust in the company's professional team and the common effort to look after the interest of the employees and all other stakeholders.