VG Siddhartha, the founder of India's largest coffee chain Cafe Coffee Day, has gone missing since Monday evening.

A letter reportedly written by VG Siddhartha to the CCD board has emerged, in which the founder wrote that he failed to create the right profitable business model despite taking best efforts.

The letter talks about the pressure that he faced from the Income Tax Department or tax officials.

On February 14, I-T department had around 75 lakh shares of Mindtree held by both Siddhartha and Cafe Coffee Day which was released to pave the way for the stake sale in Mindtree. But in lieu of that the ED had taken 2.5 crore shares of CCD to safeguard its interest when they had released Mindtree's shares.

Currently, 2.5 crore shares of CCD or Coffee Day Global is still with the I-T department.

The other pressure on Siddhartha was the debt of the company itself. The company’s net debt as of March 19 was close to around Rs 4,200 crore but on May 3 — when Siddhartha sold his Mindtree stake to L&T — they received net proceeds close to around Rs 2,100 crore. The company said in its press release that the entire amount was utilized for reduction of debt. So the debt on their books should be around Rs 2,100 crore.

However, the personal level debt could be a fair amount. Of the 53.93 percent promoter stake, 75.7 percent was pledged. Of Siddhartha’s own 32.75 percent stake in Coffee Day, around 70.7 percent was pledged.

It indicates that Siddhartha was seemingly under liquidity stress at a personal level but not necessarily at the company level.

First Published:Jul 30, 2019 2:41 PM IST