Role of some private equity players and their nominees on Coffee Day Enterprises, as also some independent directors, has come under the scanner of markets regulator Sebi in the wake of a crisis at the leading coffee chain operator following the death of its
founder and chief V G Siddhartha.
Sources said the regulator is also looking at the trading pattern in the company shares and the disclosures made by the company to check any lapses. Besides, the role of the company's audit and other board committees and their embers is also under the regulatory scanner, sources said.
There are concerns that private equity players do not make sufficient disclosures about their investment pacts and the same is also not disclosed by the respective companies which receive such funds, officials said.
The body of VG Siddhartha, the founder of India's largest coffee chain Cafe Coffee Day and who also owns Asia's single largest Coffee estate, has been found near Karnataka's Netravathi river, reported CNN-News18.
According to reports, he got off from his car near a bridge across the river Nethravathi near Mangalore, about 375 KMs from Bengaluru, but did not return.
The news of Siddhartha's disappearance spread like wildfire across Karnataka and hundreds of his relatives and friends gathered at his father in law and former Karnataka CM
SM Krishna's house in Bengaluru on Tuesday.
Global buyout major KKR, which holds around 6 percent in Coffee Day Enterprises currently, on Tuesday said it was "deeply saddened" by the disappearance of Siddhartha.
KKR mentioned that it had invested in the popular coffee chain nine years ago and part-exited the investment last year.
Siddhartha in the letter has also alleged that 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 revised returns have been filed by us".
After the news of Siddhartha's disappearance broke, eminent business leader Kiran Mazumdar Shaw tweeted, "It seems to indicate that the Private Equity fund manager acted like a money lender and seems to have caused unbearable stress - needs to be investigated".
Shares of Coffee Day Enterprises Ltd dropped 20 per cent on Tuesday, eroding Rs 813 crore from its market valuation, after reports surfaced that its Chairman and Managing Director V G Siddhartha has gone missing.
The scrip tumbled 19.99 per cent to Rs 154.05 -- its 52-week low as well as its lower circuit limit -- on the BSE. On the National Stock Exchange (NSE), shares plummeted 20 per cent to its lowest trading permissible limit for the day as also its one-year low of Rs 153.40 apiece.Led by the massive drop in its share price, the company's market valuation dived Rs 812.67 crore to Rs 3,254.33 crore on the BSE.