Coffee Day Enterprises Appoints EY To Scrutinise Accounts

Coffee Day Enterprises Ltd. on Thursday said it has appointed accounting firm EY to scrutinise the books of accounts of the company and its subsidiaries.

Besides, EY will also investigate into the circumstance under which Coffee Day’s late founder VG Siddhartha had written the purported letter dated July 27, alleging harassment by the Income Tax department.

The board of the company, in its meeting held on Thursday, also decided to appoint a person of eminence or a reputed firm as strategic corporate advisor.

“The Board of Directors in the meeting held today has appointed EY to investigate into the circumstances leading to statements made in the purported letter of the former Chairman, late VG Siddhartha dated July, 27, 2019 and to scrutinize the books of accounts of the Company and its subsidiaries,” the company said in a regulatory filing.

As per the filings with stock exchanges and the corporate affairs ministry, Coffee Day’s liabilities had doubled to over Rs 5,200 crore and Siddhartha's unlisted ventures for realty and hospitality were having similar levels of debt.

Earlier, on Aug. 6, Coffee Day Enterprises had said that it is aware of reports questioning the authenticity of the signature on the purported letter written by Siddhartha and is cooperating with regulatory authorities in this regard.

The letter, which is believed to be the final note by the late promoter and widely circulated on social media, contained statements, alleging harassment on Siddhartha by the income tax department.

Siddhartha was confirmed dead on July 31 after his body was found in the Netravati river in Dakshina Kannada district of Karnataka, a day after he went missing.

On the same day, Coffee Day Enterprises had named independent director SV Ranganath as the interim chairman of the company.

In the letter Siddhartha had said there was a lot of harassment from the previous Directorate General of the IT Department in the form of attaching “our shares on two separate occasions to block our Mindtree deal and then taking position of our Coffee Day shares, although revised returns have been filed by us”.

“This was very unfair and has led to a serious liquidity crunch,” the letter, bearing a purported signature of Siddhartha, had said.

However, the tax department had last week denied charges of harassment during their probe against Siddhartha and had pointed out that the signatures of the entrepreneur available with them were different from those on a letter being widely published on the social media.

“The authenticity of the note is not known and the signature does not tally with Shri VG Siddhartha's signature as available in his annual reports,” the statement from the IT Department had said.

In a press statement issued on July 30, Coffee Day Enterprises had admitted about the purported letter signed by Siddhartha and said that it has shared it with the authorities.

“The board also reviewed a copy of the letter purportedly signed by VG Siddhartha dated July 27, 2019 and has shared a copy of the letter with relevant authorities,” it had said.

The statement had further said, “the board has also sought the assistance of local and state authorities, who are doing their utmost, and relevant officers of the company are cooperating with the authorities as requested”.