The tussle between the founder of Sagar Ratna, the popular South Indian restaurant chain, and the present management led by private equity firm India Equity Partners (IEP), seems to be taking a turn for the worse.
Jayaram Banan, founder and minority shareholder of Sagar Ratna has filed an FIR against IEP over “offences of cheating, fabrication and forgery of documents and use of fabricated and forged documents,” among others.
IEP have dismissed these charges as “false and spurious.”
“This is a false and spurious FIR,” an IEP spokesperson told HT. “They have instigated a series of violent acts in some of the restaurants. The police, in particular at Malviya Nagar station, have refused to help.”
An executive of Ocean Pearl Hotels, run by Banan and which owns 22.7% stake in Sagar Ratna, dismissed these allegations.
“Everybody is free to say whatever they can. Till date there has been no allegation,” the executive of Ocean Pearl Hotels said.
Banan, who resigned as the chairman of Sagar Ratna Hotels, made an attempt to sell his minority shareholding after completion of three years of lock-in period in June.
In June 2011, New York-based IEP bought a controlling stake in Sagar Ratna Hotels for Rs. 180 crore.
Banan wanted to sell 22.7% stake to IEP according to current market values.
“As per the agreement, they had to offer to buy our stake at current market value. That offer has not come,” the executive at Ocean Pearl Hotels said, adding that IEP had destroyed the brand and value.“The restaurant’s brand value built over the last 25 years has been fully eroded,” he said.
An IEP spokesperson said Sagar Ratna promoters violated their contract by starting a restaurant chain under the Sri Ratnam brand. “This is in breach of the non-compete agreement and it is being done through related party entity and not directly,” said the spokesperson. “They were in deep debt when they had sold the stake in 2011.”
IEP has filed civil cases against the former founders “breaching agreements and interference in operations” and police complaints “on violence and gunmen attacking.”
“They enjoy political patronage at the highest level at the Congress party,” the IEP spokesperson said.
After taking over IEP has introduced highest governance standards and full payment of taxes at Sagar Ratna, he added.