Cafe Coffee Day founder VG Siddhartha has been laid to rest. His last rites were performed at his father’s coffee estate in Chethanahalli in Karnataka. Thousands of people, including politicians from across party lines, paid their last respects to the coffee entrepreneur.
Siddhartha’s body was found by fishermen on Wednesday morning on the banks of the Netravati River, around 36 hours after he went missing from a bridge near Mangaluru in Karnataka.
In a letter purportedly written by him to the Cafe Coffee Day board, Siddhartha complained about pressure from one private equity investor and harassment from Income Tax Department.
Siddhartha’s death has sent shockwaves across India Inc. Several young entrepreneurs are taking to Twitter blaming the unfavourable business climate in the country for Siddhartha’s death.
CNBC-TV18 talked to Harsh Mariwala, chairman of Marico, corporate lawyer HP Ranina, and Mohit Saraf, senior partner, L&L Partners for their views on the matter.
Mohit Saraf, senior partner, L&L Partners
“We must realise that under Indian law there is no principle of coercion. Whatever people agree they need to abide by that and I think we must realise that Siddhartha has built up a big empire. He had lawyers with him all throughout, so he was well advised throughout on the transaction documents so what he agreed with a private equity in what they were trying to enforce on him, if they were trying to.
“Therefore, there is nothing wrong in it. In my view that is the reason he blamed the tax department, they were also following 281. This 281 has been in law since 1975. Same thing is for lenders so the problem is when first generation promoters, when they are raising debt at the holding company level they don’t care about the cash flows they feel that their business is going to do so well that they will be able to service debt. Here he couldn’t service debt. I would blame the board, the governance and not private equity and lenders.”
Harsh Mariwala, chairman of Marico
“There are three key learnings for me one is high sense of governance from the entrepreneur’s point of view and there is no scale. Some people think, when I am large I have to have high sense of governance so that is one number.
“Second is risk taking. Every businesses has risk but you need to dream big but feet on the ground and you need to ensure that the level of risk you are taking you can digest and your business should be able to handle that.
“Third is in spite of taking all the risk there will always be some downturn, stress, things may not go as per plan and then how do you mitigate that and how do you manage that stress part of it is also an equal part of entrepreneur’s journey.”
HP Ranina, corporate lawyer
“The biggest problem in India is that tax disputes go on for years together and there are cases which are still pending in the Supreme Court which were filed maybe two decades ago. Now this is a very serious problem and unless they set up special benches of the courts nothing is going to move.
“One of the problems which we are facing in the high court is that the high court hears the matter maybe few days in a year and very rarely special benches is constituted to dispose of tax matters. Now, on issues of attachment of property, 281 B and other provisions there have been cases where courts have taken this matter out of term and in many cases people have got relief so even where attachment is made in you can show that mala fide is involved in making the attachment then courts have certainly given relief.
“So in this particular case I am little surprised that how a person of his eminence could not have immediately approached a court and got some relief as far as attachments are concerned.”