VG Siddhartha, the founder of India's largest coffee chain Cafe Coffee Day and the owner of Asia's single largest coffee estate, is reportedly missing since Monday evening. A Coffee Day Enterprises board member speaks on condition of anonymity. Excerpts:
CNN-News18 spoke to a board member of Coffee Day Enterprises who spoke on condition of anonymity. Excerpts:
Was there any indication at all of such a thing happening?
There was absolutely no indication on his part. In fact, if you look at the actual balance sheet of Coffee Day Enterprises, the debt portion had come down drastically after Siddhartha sold his shares in Mindtree . The bulk of the portion that had gone at the time of the Initial Public Offering (IPO) , had gone for debt reduction. Subsequently, these Mindtree shares also went for that.
If you look at the details provided by rating agencies, the total amount of outstanding non-convertible debentures (NCDs) is about Rs 250 crore. For a 900 crore Ebitda (Earnings before Interest, Taxes, Depreciation, and Amortization) company, a debt of Rs 250 crore is no big deal.
I have no idea if there are other private transactions that were made outside the company. We can only comment about the company’s balance sheets — whether it has assets to take care of the debt – which in this case, was not an issue at all. What Sidhartha did in his personal capacity, nobody knows.
But he was good with finance management, so it is surprising to see this day...
He was excellent with finance management and he was an entrepreneur in the true sense of the word — he built this business, he knew this business inside out. Entrepreneurs like him are critical for a country’s economy as they play a huge role in wealth creation and generating employment.
So what could have led to this?
I am as baffled as you are — as far as Coffee Day Enterprises is concerned I don't see any problem, but at the same time there are also issues of making disclosures to the exchanges, because that was the listing requirement. So whatever formality is there has to be done.
Yes, he was in talks with Coca-Cola to sell his flagship chain, along with another equity company. But those were just talks. Like I said, the Mindtree exit reduced debt portion of Coffee Day Enterprises substantially and brought it all within manageable limits.
The best way to check on this is through rating agencies. They would have done the accounts, their assessment is more valid as they are an external agency and hence would conduct the exercise impartially.
What is this he talks about harassment by income tax officials?
My understanding is that at the time the Income Tax notice was slapped on him he had said that he will pay it after which he said he will appeal to the high court as per the law. He had given it in writing that he will clear his dues. But the officials blocked the Mindtree shares. At that time he had said, “There are so many assets, so many things that you could have blocked. Why just Mindtree, when we were on the verge of the transaction taking place?” This, according to me, appears to be the issue.
Subsequently the I-T higher ups had cleared it because Siddhartha had given in writing: “We will make good every paisa whatever tax man says — even though our auditors feel we are not entitled to pay — we will pay and then we will appeal.”
Siddhartha was not the kind of person who would overstep authority. He would always comply, keep the law on the right side and then go for an appeal — as with any other citizen.