What kind of financial pressures was VG Siddhartha under?

In his alleged letter to the board, Siddhartha has said he was under other kinds of pressure.

Published: 30th July 2019 11:44 PM  |   Last Updated: 31st July 2019 01:19 AM   |  A+A-

Cafe Coffee Day owner VG Siddhartha

Cafe Coffee Day owner VG Siddhartha

Express News Service

NEW DELHI: The mysterious disappearance of Cafe Coffee Day founder VG Siddhartha has raised alarming questions about the nature of financial pressures which he was facing. Did the pressure by the Department of Income Tax on top of creditors’ troubles pose an unsurmountable problem for him?

In his alleged letter to the board, Siddhartha has said he was under other kinds of pressure. The first, from his private equity (PE) partners to buyback shares. The largest PE shareholders include NLS Mauritius LLC, KKR Mauritius PE investments II Ltd and Marina West (Singapore) Pte. Ltd holding 10.61%, 6.07% and 4.63%, respectively. Marina Iii (Singapore) Pte. Ltd has a shareholding of 1.04%.

ALSO READ | VG Siddhartha's last letter: I failed as entrepreneur, faced harassment from I-T

At the same time, the billionaire serial entrepreneur has spoken of “harassment” by the Income Tax (I-T) department, in his letter. In January 2019,  the I-T department had attached the shares that he and Coffee Day Enterprises owned in Mindtree Ltd for a “tax demand” -- a move which sparked worries that this would prevent them from selling their stake in the IT firm.

However, the IT Department, on a representation from Siddhartha, swapped the attachment of Mindtree shares for some 46.01 lakh shares of Coffee Day Enterprises held by the CCD founder in February this year, finally allowing the sale of Mindtree shares to L&T which was making a hostile take-over bid on the tech firm.

The attachments and swaps must have caused pressures on the coffee planter turned business tycoon. However, the  I-T department justified its attachments pointing out the investigations “arose from the search in the case of a prominent leader of Karnataka. Based on the unearthing of  credible evidence of financial transaction done by CCD in a concealed manner.” A Singaporean citizen was searched in this case and was found with Rs 1.2 crore in unaccounted cash, which he claimed belonged to Siddhartha.

ALSO READ | Cafe Coffee Day shares tank 20 per cent as owner VG Siddhartha goes missing

Tax officials went on to point out that in the course of the probe, Siddhartha had “admitted” to an undisclosed income of Rs. 346.46 crore and Rs. 118.02 crore belonging to him and Coffee Day Enterprise.

Out of the total consideration of Rs. 3,200 crore, from the Mindtree stake sale, Siddhartha repaid loans of around Rs. 3,000 crore and paid expenses related to transfer of Rs. 154 crore and the balance of Rs. 46 crore was paid towards the first installment of advance tax of estimated MAT liability of nearly Rs. 300 crore in the case of Cafe Day Enterprises Limited, said tax officials. Meanwhile, Siddhartha was sitting on a pile of debt and his company's indebtedness was steadily rising over the years. Consolidated debt of Coffee Day Enterprises stood at about Rs. 6,500 crore as on March 2019. 

Stay up to date on all the latest Business news with The New Indian Express App. Download now


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp