Following the reports that VG Siddhartha went missing from Mangaluru on Monday evening, the shares of the popular coffee chain Cafe Coffee Day dropped down by nearly 20 per cent to Rs 154.05 a piece, touching the 52-week lowest band. The stock, as of its Monday’s closing price, has corrected nearly 27% in the last one year.
Siddhartha, the founder of the Cafe Coffee Day group, is the son-in-law of former Karnataka chief minister SM Krishna. After the reports of Siddhartha went missing went viral, Cafe Coffee Day factory in Karnataka’s Chikkamagaluru have shut the shutters . The employees of the factory have also been asked to go home. Meanwhile Police officials have launched a massive search operation for him.
Quoting the stock market experts, various media reports claim that the major reason for such a crash in company’s shares is due to the company’s promoter VG Siddhartha going missing. They say that fundamentals of Cafe Coffee Day are already in bad shape and once the news of the ‘promoter going missing broke’, the heavy selloff was bound to happen.
It is to be noted that Siddhartha had a few days back written a note to his employees apologising for failing to create ‘a right profitable business model’. In the letter dated July 27, Siddhartha wrote, “I am very sorry to let down all the people who put their trust in me. I fought for a long time but today I gave up as I could not take any more pressure.”
Siddhartha was recently in news when he sold his entire 20.41% stake in Mindtree to Larsen and Toubro Ltd (L&T) for around Rs 3,269 crore to clear his debts. Reportedly, he had earned a profit of around Rs 2,858 crore from this transaction. The deal paved way for L&T to aggressively take over Mindtree later and gain complete control over the firm.