Following an Income Tax (I-T) department order to attach a portion of shares held by VG Siddhartha and his group Coffee Day Enterprises over a potential tax demand, the company has initiated steps to free shares of Mindtree even as the talks for stake sale is in progress.

Coffee Day has asked the I-T department to attach Rs 150 crore worth of shares of the coffee chain instead of Mindtree, owned by the company and its promoter Siddhartha, said sources familiar with the matter.

The Income Tax department has attached Siddhartha’s and Coffee Day's shares, amounting to 4.5 percent of Mindtree, citing potential claims on an ongoing assessment.

Further, Coffee Day Enterprises -- which operates popular coffee chain CCD -- said it has already discharged its tax liability along with the revised returns.

"There is no tax liability payable by the company and its subsidiaries as per the revised returns filed. The promoter has discharged all the tax liability along with the revised returns. Further, there is no undisputed tax liability for the promoter and the company," Coffee Day Enterprises informed in a regulatory filing on Saturday.

The development comes at a time when Siddhartha, who owns about 21 percent stake in Mindtree through various entities, is said to be in advanced discussions to sell his shares in the IT firm.

The I-T department order cited potential tax obligations but sources said it is likely linked to raids on Coffee Day in 2017.

On January 26, Mindtree had informed the stock exchanges that the I-T department has attached a portion of shares held by Siddhartha and Coffee Day Enterprises Ltd in IT firm Mindtree.

It added that the attachment also "prohibited for transfer or charge" of 22.2 lakh equity shares of Coffee Day Enterprises Ltd, and 52.7 lakh shares held by Siddhartha.

Siddhartha is keen on closing the stake deal this week and L&T has emerged as the top contender and has entered into enabling resolution with Coffee Day and Siddhartha to buy 21 percent stake in Mindtree.

He is looking to deleverage balancesheet in order to pay off Coffee Day's debt of about Rs 5,000 crore. He is also in talks to divest from office tech park in Bengaluru.

Coffee Day Enterprises Limited said it has an outstanding debt of Rs 923 crore as of Q2 FY19 and market value of investment in Mindtree held by the company is Rs 2,437 Crore.

According to the sources, the deal with L&T will be at Rs 975-Rs 1,000 per share, lower than the initial offer of Rs 1,200 per share by the construction major.

Meanwhile, the Mindtree management is hustling to prop up a rival bid through another investor and have held talks with private equity companies such as KKR as well as some family offices, the company insiders told CNBC-TV18.

Mindtree's promoters, which include Subroto Bagchi, Krishnakumar Natarajan, NS Parthasarathy, and Rostow Ravanan, together hold roughly 13 percent stake in the company.

Siddhartha and the Mindtree founders were unavailable for comment while L&T did not respond to queries.

With inputs from PTI.

First Published:Jan 28, 2019 9:58 PM IST