Shares of Coffee Day Enterprises Ltd slumped 20%, or their maximum daily limit, to an all-time low on Tuesday after company founder and managing director V.G. Siddhartha went missing and was suspected to have committed suicide.
The stock tumbled ₹38.50, or 20%, to ₹154.05 on BSE. It is down 57% from its all-time high of ₹360.20 on 22 January 2018. Year to date, the stock has lost 44.4%.
In an emergency meeting on Tuesday, the board of Coffee Day Enterprises said that it is confident that the professional management of the company and each of the entities in the Coffee Day Group and their respective leadership teams will ensure continuity of all business operations consistent with past behaviour.
In the interim, the board said it is evaluating and assessing the situation, formulating appropriate steps to ensure business operations are unaffected, and has resolved to cooperate with authorities.
“V.G. Siddhartha, our promoter and chairman and managing director has not been reachable since yesterday evening. We are shocked by this development and our thoughts and prayers are in support of his family and loved ones," said a company statement to the exchanges.
The incident rattled investor sentiment in an already gloomy environment. On Tuesday, the Sensex fell 289.13 points, or 0.77%, to 37,397.24, while the 50-share index Nifty declined 0.93% to 11,085.40.
Fear engulfed financial stocks on worries that the incident may deepen the liquidity crisis. Nifty PSU Bank index shed 4.88% while overall Nifty Bank index fell 1.72% on Tuesday.
“The latest episode of missing promoter of Coffee Day Enterprises has dealt a sentimental blow to investors who are already undergoing a lot of pain. The repercussion of this event on other entities is still being calculated," said Deepak Jasani, head of retail research, HDFC Securities Ltd.
The Coffee Day stock has been on a downward trend since March after Larsen & Toubro Ltd signed a deal with Siddhartha to buy his stake in software services company Mindtree. “Now, the unfortunate event of founder going missing and the alleged letter left by him underlines the crisis in the company. The letter in the media reveals that Siddhartha was under tremendous pressure from other lenders. From the information available, CCD is severely affected by the slowdown in the economy and liquidity crunch," said an analyst.
As of June, Siddhartha held 32.75% in Coffee Day Enterprises, of which he has pledged nearly 71.4%. Infosys co-founder Nandan Nilekani owns 2.6% while KKR Mauritius has a 6.07% stake in the company.