Mindtree says had detected irregularities by V G Siddhartha in disclosures

IT company Mindtree Tuesday said it had found certain irregularities in disclosures made by Coffee Day promoter V G Siddhartha, who sold stake in the company to L&T, and had taken action against him as per the law, according to a top official of the Bengaluru-based IT firm.

"On the pledge disclosure issue, there was a disclosure that he made at certain point of time of all the pledge. At that point of time, there were some irregularities in his disclosures. Our board and audit committee evaluated it and handled it as per the rule that were prevailing at that point of time," Mindtree CEO Rostow Ravanan told reporters here.

In this regard, a complaint against Siddhartha alleging insider trading during his stint at Mindtree has also been filed with Sebi by an anonymous person, according to sources.

Email query sent to Siddhartha in the matter elicited no reply.

The complaint filed against Siddhartha alleged that he and his firm Coffee Day group sold shares that were pledged before various financial institutions.

The complaint argued that if these shares are pledged, disclosure should have been made about these pledges under the SEBI Insider Trading Regulations and SEBI Takeover Regulations, sources added.

Strangely, only one disclosure on pledge by Siddhartha found in June 2018 and no disclosure about the pledges created by the other Coffee Day companies, they said.

Siddhartha was a director of Mindtree since 1999 and resigned only in March 2018. He along with Coffe Day group firms held 20.32 stake in Mindtree and has entred in to deal with L&T for Rs 3,269 crore.

"He (Siddhartha) has done pledging transactions when he was an insider, even when Mindtree trading window was closed. His companies also made pledging transactions. He and his companies have made no disclosures on pledge transactions. Why they have made no disclosures? Was there some insider trading going on? Something is wrong here," sources alleged.

Mindtree's promoters have called L&T bid as hostile on and raised corporate governance that L&T is facing and culture difference between the two organisations.

The co-founders in a letter said that many institutional investors, clients and employees of MindTree have expressed their reservations to be part of an L&T-controlled organisation due to cultural difference between the two companies.

Mindtree promoter and Executive Chairman Krishnakumar said it is a hostile bid from the infrastructure giant.