Sagar Ratna promoter Jayaram Banan lodges FIR against PE-led management
NEW DELHI: Popular south Indian cuisine restaurant chain Sagar Ratna’s promoter and founder Jayaram Banan has filed an FIR against the restaurant’s current management led by private equity firm India Equity Partners (IEP) over allegations of “cheating, fabrication and forgery of documents”, escalating the long-standing conflict between the investor and promoter.
“Banan has resigned as chairman of Sagar Ratna as per the agreement between him and IEP inked three years ago, which ended in June. Now, as part of the same agreement, he wants to sell off his 22.7% equity in Sagar Ratna at current valuations, as per the agreement.
But IEP has not responded to the same,” said an executive at Sagar Ratna Restaurants with knowledge of the matter. The row reflects a broader trend of conflict erupting between PE funds and founders. Also, several PE funds have invested in various food-related businesses in India but the results have been mixed. IEP holds 73-75% of Sagar Ratna and the Banan family owns the rest.
“Banan offered to sell his minority shareholding after completion of the three-year lockin period by giving right of first offer to IEP,” said the company insider quoted earlier. From what this person said, it appears that the key issue dividing the two sides is valuation.
It was after this that Banan lodged an FIR against IEP partners Sid Khanna and Ravi Sampat as well as Sagar Ratna Restaurants CEO Murli Parna based on the accusations cited above. ET has reviewed a copy of the FIR. IEP in turn has accused Banan of violating their contract by starting a restaurant chain — Shri Ratnam. An IEP spokesperson said: “This is a spurious and false FIR.
We have lodged multiple civil cases against Banan and associates, which include severe breach of non-compete, interference in the operation of Sagar Ratna restaurants and use of force. He has political patronage from the highest levels in the Congress party, and we have taken this matter to the highest governing authorities.” Banan, on his part, has alleged that IEP has destroyed Sagar Ratna’s brand value and profitability.
The restaurateur, who founded Sagar Ratna in 1986 in Delhi, sold off a majority stake to IEP in mid-2011. Currently, close to 80 stores are operational under the Sagar Ratna brand, most of which are in the northern states.
Banan could not be reached for comment. He runs another chain, Swagath, in New Delhi. Late last year, Banan had proposed to buy back IEP’s majority stake in Sagar Ratna for about Rs 135 crore, 25% less than the Rs 180 crore that the PE fund had paid for it. But an industry insider said IEP didn’t respond to the offer.
Read full article: Economic Times