CCD founder-owner raided for INR 650 Cr; Stock prices crash

What happened?

Search and seize operations that began on September 21 on the famous Cafe Coffee Day (CCD) chain revealed a concealed income of INR 650 Cr. The raids were carried out across 25 different locations in Karnataka, Mumbai and Chennai including offices and homes of the Founder-Owner V. G. Siddhartha and other officials in Bengaluru, Chikkamagaluru, Hassan and Mysuru.

Cafe Coffee Day outlets are run by Amalgamated Bean Coffee Trading Company who corporate office and branches were also searched for.

Tax Evasion and other violations

Owner Siddhartha is the son-in-law of S. M. Krishna(former External Affairs Minister, Congress) who recently joined the BJP. The raids were carried out to gather evidence for the allegations of tax evasion.

There are a number of other issues, including violations of other statutes on which there is no disclosure [by Cafe Coffee Day], but relevant evidence has been found,” the Income Tax department said in an email to the news agency.

A number of other seized documents of properties, business transactions and other dealings are also up for scrutiny. A tax official was quoted,

The searches concluded with the group’s officials admitting to concealed income exceeding Rs 650 crore and the detection of undisclosed income, which is expected to be a much higher figure.

Effect on CCD

Shares of Coffee Day enterprises tanked by 9.86% from INR 208.95 early on Monday morning. They had registered a consolidated net profit of INR 26.83 Cr for the first quarter of 2017 which is a 51.15 per cent increase. Cafe Coffee Day with 33 outlets in Mumbai alone and such a serious blow to their reputation will probably not go down well with so much competition in the business.