Tax department halts VG Siddhartha's plan for stake sale in Mindtree

Bengaluru: The income tax department has restricted transfer of V G Siddhartha and his company Coffee Day Enterprises’ shares in Mindtree for a period of six months, citing that the department could raise tax demand.

Siddhartha and his associates hold nearly 21% stake in the Bengaluru-headquartered mid-tier IT services firm Mindtree. The Coffee Day Group founder backed the company during its inception in 1999.

ET had reported last week that Siddhartha has been in final talks with L&T Infotech (LTI) and private equity firm KKR to sell his stake in Mindtree and the transaction was supposed be completed in 10 days.


Mindtree said a notification to the Bombay Stock Exchange today that 74,90,000 equity shares of both Siddhartha (52,70,000) and Coffee Day Enterprise (22,20,000) amounting to 4.5% have been restricted from transfer or change following a prohibitory order from the Assistant Commissioner of Income Tax, Central Circle, Bengaluru.

This restriction will remain for 6 months beginning January 25.

This could delay any potential stake sale in Mindtree, said a Mumbai-based equity analyst.

“Provisional attachment u/s 28 lB of Income Tax or prohibitory orders Act, 1961 for tax demand likely to be raised by the Income Tax Department on the following shareholders of the Company:
(i) Coffee Day Enterprises Limited, (ii) VG Siddhartha,” said Mindtree in its notification elaborating on the reasons behind a restriction.