Ernst and Young to investigate Coffee Day incidents

Chennai: Coffee Day Board, which met on Thursday for the second time after the demise of its founder V G Siddhartha, appointed EY (Ernst and Young) to investigate the circumstances leading to his death.  Siddhartha’s widow Malavika Hegde has been appointed as an additional member of the recently formed executive committee.

EY will investigate the circumstances that led to the statements made in the purported letter by Siddhartha dated July 27. It will also scrutinise the books of accounts of the company and its subsidiaries. The letter reportedly found in Bengaluru and addressed to the board of directors and CCD family had said that he was pressured by a private equity investor to buy-back shares. He had partially completed the transaction six months ago by borrowing a large sum of money from a friend. He had also accused former Director General of Income Tax Department of harassment.

On Thursday, the board also decided that it owes a duty to all the stakeholders to ensure that the company continues to have a strategic direction and a suitable way forward. To achieve this objective, it was decided to appoint a person of eminence or a reputed firm as strategic corporate advisor/s to the board, the company told stock exchanges.

Further, Malavika Hegde was appointed as an additional member of the executive committee which was formed in the board meeting held on July 31. The executive committee was constituted to explore opportunities to deleverage the Coffee Day Group and investigate the financial transactions mentioned in Siddhartha’s letter.

Initially the board had decided to have S V Ranganath, the Interim Chairman, Nitin Bagmane Interim COO and R Ram Mohan, CFO, in the committee. The committee will exercise the powers previously vested with the CEO and the administrative committee.

According to sources, Hegde has been involved in the management of the Coffee Day Resorts.