Police — not market regulator Sebi or the ministry of corporate affairs — appear to be the first to have kicked off an investigation into the financial affairs of V.G. Siddhartha, founder of the Café Coffee Day chain.

Siddhartha died in mysterious circumstances on Monday night after leaving behind a letter in which he accused federal tax sleuths of hounding him to recover dues.

Mangalore police commissioner Sandeep Patil told reporters on Thursday that he had asked Ram Mohan, the chief financial officer of Coffee Day Enterprises, which owns the coffee chain, and the company’s financial advisers “to meet us to discuss the contents of Siddhartha’s letter and check whether it is genuine”.

In his letter in which he had also blamed a private equity investor for trying to force him to buy back shares in the company, Siddhartha had hinted that he had been involved in some financial transactions which he hadn’t disclosed to his family, auditors, directors or senior company executives.

“My intention was never to cheat or mislead anybody. I have failed as an entrepreneur…. I hope someday you will understand, forgive and pardon me,” Siddhartha wrote in the letter that was addressed to the company’s board of directors and the Coffee Day family.

On Wednesday, the Coffee Day Enterprises board had met and resolved to “thoroughly investigate the matter”.

It also appointed renowned legal firm Cyril Amarchand Mangaldas to advise it on all emergent issues. The law firm had been hired by Infosys too when a whistleblower filed complaints with Sebi about certain controversial deals involving the then chief executive Vishal Sikka.

The company may well order a forensic audit of all its financial transactions.

But first it will have to figure out whether Siddhartha was referring to transactions in his personal account or on the accounts of the company.

The income tax department had released a letter to defend its actions in the entire scandal by suggesting that Siddhartha had given a sworn statement to them in which he admitted possession of unaccounted income of Rs 362.11 crore. He had apparently also said the company was in possession of unaccounted income of Rs 118.02 crore.

The income tax department has questioned the authenticity of the letter, arguing that the signature did not tally with the one on their records. Handwriting experts have confirmed to this paper that the signature was Siddharth’s after comparing with three other samples from official documents that had been signed by the Coffee Day founder and available in the public domain.

Coffee Day Enterprises has 46 subsidiaries, three associate firms and three joint ventures – adding up to 52 entities under its overarching umbrella.

Siddhartha and Coffee Day Enterprises sold their combined holding of 20.3 per cent in one of these associate firms –- Mindtree -– to Larsen and Toubro for a little over Rs 3,200 crore in May.

One area of concern has been the steady rise in the indebtedness of Coffee Day Enterprises. The audited financial results for 2018-19 reveal that its current had more than doubled to Rs 5,251.05 crore from Rs 2,457.32 crore. This includes fresh borrowings of Rs 3,889.63 crore – 4.8 times the previous year’s level of Rs 810.91 crore.

The board of directors of Coffee Day Enterprises – which is due to meet next on August 8 – said in its latest regulatory filing that it will “explore opportunities to deleverage the Coffee Day group”.

The August 8 meeting was originally meant to approve the unaudited results for the first quarter (April-June) but that may have to wait. Instead, the the audit committee and the executive committee will engage with the statutory auditors – BSR & Associates LLP – to “recommend appropriate next steps” to deal with the situation which will be vetted by the board of directors.

The statutory auditor may be sucked into any investigation that the regulator or the ministry of corporate affairs orders into the affairs of the company. But it does have one escape hatch.

In its auditor’s report appended to the audited accounts for 2018-19 – which was released on May 24 – BSR had said: “We did not audit the financial statements of forty subsidiaries included in the consolidated annual financial results, whose annual financial statements reflect total assets of Rs 12, 140.16 crores as at 31 March 2019 as well as the total revenue of Rs. 4,091. 71 crores for the year ended 31 March 2019.”

It added: “These annual financial statements and other financial information have been audited by other auditors whose reports have been furnished to us by management, and our opinion on the consolidated annual financial results, to the extent they have been derived from such annual financial statements is based solely on the report of such other auditors.”