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Coffee Day owner VG Siddhartha’s ‘disappearance' raises questions on ease of doing business in India

Biocon CMD, Kiran Mazumdar Shaw, asks Govt to look at ways of relieving stress of businesses

July 30, 2019 / 03:14 PM IST

Coffee mogul VG Siddhartha's “sudden disappearance” has garnered attention of corporate honchos and Karnataka politicians alike.

In Bengaluru, Siddhartha is not just well-known for the Café Coffee Day chain he started back in 1996, a unique concept before the advent of Starbucks. He is also the son-in-law of Karnataka’s former Chief Minister SM Krishna.

Starting from Chief Minister BS Yediyurappa to Congress leaders DK Shivakumar and BL Shankar and JD(S) HD Kumaraswamy visited SM Krishna’s home on July 30 morning. JD(S) Patriarch HD Deve Gowda visited Krishna’s residence as well.

This has also brought to light the ease of doing business and lack of support when it comes to lending a helping hand to businessmen, when needed.

In his letter to shareholders, Siddhartha mentioned that tremendous pressure from one of the private equity partners and lenders had led to liquidity crunch and made him to “succumb to the situation”.

VG Siddhartha’s letter: Which investor’s ‘pressure’ was Coffee Day owner referring to?

Biocon CMD, Kiran Mazumdar Shaw, told CNN-News18, "He (Siddhartha) seems to have undergone huge stress from PEs and I-T. These two have to be investigated. Govt should look at ways of relieving stress of businesses.”

Shaw said in her tweet that it was such a “shocking and sad end to a quiet and unassuming pioneer who started the coffee cafes business ahead of Starbucks in India”.

'I have failed as an entrepreneur,' says Cafe Coffee Day owner in letter to staff

Siddhartha was referring to two situations – a private equity partner forcing him to buy back shares and trouble from income tax that blocked him from selling Mindtree shares amid the takeover battle that ensued between Mindtree and L&T.

Since 2017, Siddhartha has been in trouble from the Income Tax Returns department, which had attached 4.5 percent Mindtree stake to cover any tax liabilities prior to stake sale to L&T. In his letter, he said, this had happened despite filing a revised tax filing.

Congress leader Milind Deora, said in a tweet, “Siddhartha is an exceptional entrepreneur who introduced millions of Indians to coffee. His is the ugliest example of how agency persecution is wrecking India’s growth story.”

Amit Ranjan, co-founder, Slideshare, said in his tweet, said, “This is a sad day for startups and entrepreneurship in India. New age startups are lucky to be largely funded by equity, when debt driven businesses are far more harsh and stressful.”

Moneycontrol News
first published: Jul 30, 2019 01:30 pm

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