Over 25 offices and plantations of Coffee Day Enterprises, India's largest coffee chain, and its promoter V G Siddhartha were searched by Income Tax officials, which the department said was a routine search to look for unaccounted wealth.
An entrepreneur who opened India's first cyber cafe in 1998 and launched the brand, Siddhartha, is among the country's top exporters of coffee from the country. As an investor in technology firms, he has also backed IT services firm MindTree and is among the few people who bailed out Infosys when its initial public offer was under-subscribed.
Siddhartha is the son-in-law of former Karnataka Chief Minister S M Krishna, who had shifted allegiance to the Bharatiya Janata Party (BJP) last year. As a back-room in-charge, he helped Krishna and the Congress party win the 1999 assembly elections in Karnataka.
An Income Tax spokesperson said that the search operations began on Thursday morning and were part of a routine exercise. Searches were conducted at Coffee Day headquarters in Bengaluru, its offices in Mumbai and Chennai and plantations in Chickmagalur- a coffee growing region in Karnataka.
Besides being the largest organised coffee retail chain, the Coffee Day Group runs technology parks and SEZs housing global IT firms. It also behind Sical, which is an integrated logistics firm and the Coffee Day trading that helps companies in investments. It also runs Serai, which operates three luxury resorts in Karnataka.
The news of the raid hit the Coffee Day stock, which plunged over 10 per cent before recovering to close 3.35 per cent down at Rs 233.80 on Thursday. Investors also exited stock of Sical Logistics, which closed 3.65 per cent lower at Rs 217.80 on the Bombay Stock Exchange (BSE).