After the tragic demise of the founder, Café Coffee Day’s board has announced that an executive committee has been set up to exercise the powers previously vested with VG Siddhartha.
The company, on Wednesday, appointed SV Ranganath as the interim chairman of the board. Also, Nitin Bagmane was named as an interim chief operating officer of the company on terms to be detailed and approved by the board later. Bagmane is also a director on the board of Tanglin Developments Ltd, a subsidiary of Coffee Day Enterprises.
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Against the backdrop of certain allegations made by Siddhartha in a purported letter dated July 27 to the company's board, Coffee Day Enterprises announced that its board has initiated a probe into past transactions made by the company and Siddhartha. “The Board noted with profound regrets the tragic demise of V G Siddhartha and his matchless energy, vision and business acumen which helped to single-handedly build the company,” it said in a regulatory filing.
The company’s board also decided to constitute an executive committee comprising Ranganath, Bagmane and R Ram Mohan (CFO of Coffee Day Enterprises) to jointly exercise the powers previously vested with the CEO (Siddhartha) and the administrative committee of the company’s board in 2015.
The company will also, in due course, will explore opportunities to deleverage the Coffee Day Group. In a purported letter by Siddhartha, it was mentioned that CCD was in talks with Coca Cola and ITC to explore a potential “operational partnership".
While Coca Cola spokesperson has dismissed such reports, stating “the news is speculative in nature and as a matter of company policy, we do not have any comments to offer at this point in time”, industry observers said that the company is likely to revisit the plan while revising its offer.
If the deal materialises, it would be Coca Cola's second major investment in coffee retail after acquiring UK-based Costa Coffee for $5.1 billion in September 2018 even as the company is consciously reducing dependence on its core soft drinks business which is gradually losing its sheen due to change in consumer preference, and is perhaps looking at global leadership in the coffee business.
The company said the audit committee and executive committee will engage in discussions with the statutory auditors and such other advisors with a view to recommend appropriate next steps to the board at its forthcoming meeting on August 8. The board has also appointed Cyril Amarchand Mangaldas as its legal counsel to advise the company on the foregoing and related matters.
Here is what the Cafe Coffee Day board had said in a statement:
The Board noted with profound regrets the tragic demise of Mr. V. G. Siddhartha and his matchless energy, vision and business acumen which helped to single-handedly build the Company. The Board expressed its condolences to Mr. V. G. Siddhartha's family and resolved to lend its support and expressed full confidence in the Company's management team. The Board also took note of a message from Mrs. Malavika Hegde expressing support and trust in the Company's professional team and the common effort to look after the interest of the employees and all other stakeholders
The Board remains deeply committed to safeguarding the interests of all stakeholders, including investors, lenders, employees and customers
The Board took the following decisions at its board meeting
1) Appointment of Mr. S. V. Ranganath as the interim chairman of the Board
2) Appointment of Mr. Nitin Bagmane as an interim chief operating officer of the Company on terms to be detailed and approved by the Board
3) Constitution of an executive committee comprising Mr. S.V. Ranganath (Non-Executive Independent Director), Mr. Nitin Bagmane (COO) and Mr. R. Ram Mohan (CFO) to exercise the powers previously vested with the Chief Executive Officer of the Company and the Administrative Committee constituted by the Board in 2015. The Board will, in due course, prepare a detailed charter of authorities vested in the Executive Committee and approve the same. The Executive Committee will, inter alia, explore opportunities to deleverage the Coffee Day Group.
The Board took cognizance of statements in the purported letter from Mr. V. G. Siddhartha relating to financial transactions outside the knowledge of the senior management, auditors and the Board. While the authenticity of the letter is unverified and it is unclear whether these statements pertain to the Company or the personal holdings of Mr. V. G. Siddhartha, the Board took serious note of the same and resolved to thoroughly investigate this matter.
The Audit Committee and Executive Committee will engage in discussions with the statutory auditors of the Company and such other advisors as may be necessary with a view to recommend appropriate next steps to the Board at its forthcoming meeting on August 8.
The Board has also appointed Cyril Amarchand Mangaldas as its legal counsel to advise it on the foregoing and related matters. The meeting commenced at 10.30 am and concluded at 1 pm.