Siddhartha, in a letter purportedly written by him before his death, had said the management and his family were unaware of his personal financial dealings
The Coffee Day Enterprises
saga has taken a new turn with the investigating team on Friday giving a clean chit to private equity investors and income tax authorities in connection with the demise of the company’s founder chairman, V G Siddhartha, last year.
The probe team appointed by Coffee Day (CDEL) and headed by retired DIG of the CBI Ashok Kumar Malhotra found that a private firm of Siddhartha — Mysore Amalgamated Coffee Estates Limited (MACEL) — had outstanding dues worth Rs 2,693 crore towards CDEL. This amount was not accounted for in the financial statements of the company.
While the investigation found that MACEL owed Rs 3,535 crore to several subsidiaries of CDEL on July 31, 2019, financial statements mentioned only Rs 842 crore as dues at the end of March 2019. The gap of more than Rs 2,600 crore found no mention in the balance sheet, making it a blind spot open to investigation.
“We found that a significant portion of the aforementioned money may have been spent to buy back equity from PE investors, repay loans and to pay interest apart from funding certain further private investments which are outside the scope of investigation,” the firm said.
“Consequently, these amounts are not precisely ascertainable,” the company said in an exchange filing.
Backing the statement made by Siddhartha that he was not able to create a right profitable business model, the report pointed out that the rising liquidity crunch, repeated reminders by PE firms and lenders to repay money could have triggered averse behaviour stimulus for the founder of Coffee Day group.
“We are of the considered opinion that the communiques, mail exchanges and the one-on-one discussions with the key management personnel and other officers of the company and its subsidiaries are not suggestive of any existing information to draw a positive inference that Siddhartha’s team and the senior management were cognitive of the manner in which certain transactions were carried out,” the report said.
The board of CDEL on Friday empowered the chairman to appoint a former judge of the Supreme Court or the High Court to suggest and oversee actions for recovery of the dues from MACEL.
CDEL, which runs the coffee chain Coffee Day, also said its debt level has substantially come down to Rs 3,200 crore from Rs 7,200 crore in March 2019.
“Disinvestment process in the group continues and we are confident of an effective solution to all stakeholders,” said the company.