VG Siddhartha, the Coffee King of India: A lot has happened over coffee over the last few years
VG Siddhartha has been hitting headlines for the wrong reasons like income tax raids, Mindtree shares selloff to L&T despite opposition from tech major's management, real estate venture sell out and more.
VG Siddhartha, the coffee king of India, who has gone missing in Mangaluru, has been facing a number of problems over the last few years! In fact, Cafe Coffee Day (CCD) owner VG Siddhartha has been hitting the headline for all bad reasons over the last few years. His name first appeared in headlines in a controversy in 2017 when the Income Tax Department (I-T Dept) raided his office in multiple locations across Mumbai, Bengaluru, Chennai and his hometown Chikmagalur in Karnataka. After the completion of raids, the I-T Dept said that there had been an admission of concealed income to the tune of Rs 650 crore.
A statement from the I-T department said, "The searches in a group involved in coffee, tourism, information technology and other areas concluded with an admission of previously concealed income exceeding Rs 650 crore. The detection of undisclosed income is expected to be a much higher figure," adding, "There are a number of other issues including violations of other statutes on which there is no disclosure but relevant evidence has been found... these will be pursued effectively with vigour, energy and imagination."
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Another big controversy erupted when the CCD owner sold his 20.32 per cent stake in the one of the top IT companies in India, which is MindTree. Larsen and Toubro took over Mindtree in the largest hostile takeover ever in India. This sale of MindTree shares by VG Siddhartha to L&T was worth near Rs 3,200 crore. But, due to this bulk sale of the MidTree shares by VG Siddhartha, the L&T actual owners lost their control over the company to L&T. VG Siddhartha's decision to sell off his MindTree shares to L&T finally led to a takeover of the IT company by L&T. Now, L&T holds near 60 per cent of the MindTree shares and has full control over the company.
Apart from this, VG Siddhartha was in news recently for his plans to sell his real estate venture Tanglin Developments to Blackstone. But, the CCD owner after having a series of discussions with Blackstone, abruptly decided to call off his plans to sell his real estate venture in June 2019.
VG Siddhartha was also in talks with Coca-Cola to sell Cafe Coffee Day chain. However, the deal had not gone through till date.
Full Text of VG Siddhartha letter to Board and Employees
"To our Board of Directors and Coffee Day family,
After 37 years, with strong commitment to hard work, having directly clearly 30,000 jobs in our companies and their subsidiaries, as well as another 20,000 jobs in technology companies where I have been a large shareholder since its founding, I have failed to create the write profitable business model despite my best efforts.
I would like to say I gave it my all. I am very sorry to let down all the people that put their trust in me. I fought for a long time but today I gave up as i couldn't take any more pressure from one of the private equity partners forcing me to buyback shares, a transaction I had partially completed six months ago by borrowing a large sum of money from a friend. Tremendous pressure from other vendors let to me succumbing to the situation. There was a lot of harassment from the previous DG Income Tax in the form of attache our shares on two separate occasions to block our Mindtree deal and then taking position of our Coffee Day shares, although the revised returns have been filed by us. This was very unfair and has lead to the serious liquidity crunch.
I sincerely request each of you to be strong into continue running these businesses with new management. I am solely responsible for all mistakes. Every financial transaction is my responsibility. My team, auditors and senior management are totally unaware of all my transactions. The law should hold me and only me accountable, as I have withheld this information from everybody including my family.
My intention was never to cheat or mislead anybody, I have failed as an entrepreneur. This is my sincere submission, I hope someday you will understand, forgive and pardon me.
I have enclosed a list of our assets and tentative value of each assets. As seen below, our assets outweigh our liabilities and can help repay everybody."
(Zee Business does not vouch for the veracity of this purported letter written by VG Siddhartha)
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