Coffee Day shares plunge as CMD V.G. Siddhartha goes missing

Shares of Coffee Day Enterprises, the owner and operator of the ubiquitous Café Coffee Day (CCD) chain, plunged 20% to ₹154.05 apiece in morning trade, hitting a 52-week low, as reports emerged that the company’s chairman and managing director V.G. Siddhartha was missing since Monday evening. Coffee baron Siddhartha is also the son-in-law of former Karnataka chief minister S.M. Krishna, who left the Indian National Congress in 2017 and joined the Bharatiya Janta Party.

According to a report by digital platform The News Minute, “Siddhartha got out of his car near a bridge across the Nethravathi river in Mangaluru. His driver panicked when he did not return in an hour, and informed the family. The Dakshina Kannada police have been searching for Siddhartha since last night.”

Coffee Day Enterprises issued a statement to the stock exchanges that read: “This is to inform you that, Mr. V.G. Siddhartha, Chairman and Managing Director of Coffee Day Enterprises Limited, has not been reachable since yesterday evening. We are taking the help of concerned authorities.” And further added, “The company is professionally managed and led by competent leadership team, which will ensure continuity of the business.”

Siddhartha has been making headlines since March this year when he sold his 20.32% stake in IT services firm Mindtree to infrastructure major Larsen & Toubro (L&T) for ₹3,269 crore. Post that there was a bitter, open spat between the founders of Mindtree, who cumulatively owned under 14% stake in the company, and L&T. Eventually, L&T bought controlling interest in the IT services firm.

Interestingly, Mindtree started out in 1999 from Siddhartha’s office in Bengaluru, after he gave them $2 million in capital. As a sector, IT services was not a new domain for Siddhartha. In his earlier days as a hot-shot trader, he placed many a bet on another Bengaluru-based IT firm Infosys, which reaped him rich dividends.

In 1996, Siddhartha opened the first CCD outlet on Brigade Road in Bengaluru with a vision of connecting people over a cup of coffee. Since then, as Coffee Day Enterprises’ says in its 2018 annual report, “Coffee and hangout spaces in India would never again be the same.” As of 2018, CCD has emerged to become India’s largest café chain with close to 2,700 retail coffee points across the country and 47,500-plus vending machines across corporate India. The company controlled more than 70% of the vending business in fresh milk coffee in India.

In addition to creating CCD, Siddhartha also diversified his business interests which include technology parks and special economic zones, logistics services, financial services and hospitality. He also manages a luxury resort located in the Andaman and Nicobar Islands. All these business are under the listed entity Coffee Day Enterprises.

In fiscal 2019, Coffee Day Enterprises reported a consolidated profit of ₹147.2 crore on a revenue of ₹4,264.4 crore. However, its core cafe business reported a loss of about ₹70 crore.

Upon hitting the lower circuit shares of CDEL were locked for trading for the day.