While there has been news coming of the promoters of Coffee Day Enterprises Limited (CDEL) trying to sell off their coffee plantations to raise funds to pay off the company’s debts, Bloomberg has reported that the investigations into the company following the sudden demise of the founder-promoter, VG Siddhartha may conclude that at least ₹20 billion ($270 million) is missing from its books.
It was in July 2019 that VG Siddhartha’s body was recovered from water near a bridge where he told his driver he was going for a walk. A note left by him mentioned that the company had run up huge debts and that there was pressure from lenders and tax authorities. He said in the note that he took full responsibility for the financial transactions in the company.
While the police may be conducting their own investigation into his death, the reports to be released soon is of a separate investigation launched by the company through Ashok Malhotra assisted by a senior lawyer. Malhotra retired from one of India’s enforcement agencies.
What Bloomberg has reported is that the report by this investigative team has been compiled but is yet to be finalized and submitted to the company. They have obtianed some details from the draft report. The report is likely to point out that there were indeed transactions between some of the personal companies that Sidharth owned and the listed entity CDEL that raise doubts. Another finding could be that there were loans raised giving coffee estates owned by the founder and even a number of employees. The valuations of these properties might have been exaggerated as well.
Once the report gets submitted, there may be more audits and investigations ordered by regulatory authorities to unearth the extent of irregularities in the finances of CDEL, a public company, answerable to its shareholders.