Mumbai, July 30 (IANS) The mysterious circumstances under which Cafe Coffee Enterprise's founder V.G. Siddhartha went missing with the subsequent appearance of his purported note to investors may wreak havoc on company shares, analysts said.
Markets analysts said that shares may lose one-third of its value if clarity regarding its financials is not declared soon.
Further panic was caused post the revelation of a letter by V.G. Siddhartha (yet to be confirmed) where he talked about certain specific transactions and said that "Every financial transaction is my responsibility. My team, auditors and senior management are totally unaware of all my transaction. The law should hold me and only me responsible."
Cafe Coffee Enterprise on the BSE are trading at Rs 154.05 apiece, after it hit lower circuit post a decline of 20 per cent during the early trade on Tuesday.
Analysts have warned that further panic selling can cause the share value to fall down to double digit from Rs 154 currently.
"We may see the stock to slide further to double digits if the clarity regarding its financials is not declared. The case reminds us of the notorious case of Satyam fiasco," said Romesh Tiwari, Head of Research, CapitalAim.
He further said that CCD shares have been hitting 52-week lows for quite some time in the last couple of months. "Now the unfortunate event of the Siddhartha missing and in the light of the alleged letter left by him clearly underlines the crisis in the company".
Mustafa Nadeem, CEO, Epic Research said that panic has been created both due to CCD founder going missing and the purported suicide letter. "The letter has further increased panic amongst investors. Since it has talked about financials, lenders, business's liabilities and assets".
Adding that the problem will become worse when many lenders will try to exit the company at once.
However, the company in a regulatory filing, while informing the missing founder said: "We are taking the help of concerned authorities. Company is professionally managed and led by competent leadership team, which will ensure continuity of business."
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