The future here of Indian logging company Vaitarna will come under increasing scrutiny after its sister company in the state of Karnataka shut down suddenly yesterday, months after its owner V G Siddhartha died in an apparent suicide.
Dark Forest Furniture Co. (Daffco), the firm promoted by the late coffee baron Siddhartha closed its operations yesterday, according to The Hindu.
The report noted that Daffco had designed and developed hardwood furniture for all Cafe Coffee Day (CCD) outlets, the CCD Group’s hospitality venture Serai properties and other clients.
“The firm informed the 65 employees working at the furniture factory in Chikkamagaluru that it was shutting down.
“It said after the tragic demise of Mr. Siddhartha, the company faced financial constraints. Though efforts were made to revive the business, they did not yield much result. The company was going through an acute financial crisis due to lack of orders, it added. It also said it was terminating all its employees with immediate effect. Set up in February 2010, Daffco was emerging as one of the country’s largest integrated wood processing plants with ultra modern and automated production lines and state-of-the art machinery”, according to the report in The Hindu.
Siddhartha planned to build his furniture business into the country’s largest designer furniture outfit, the report said, citing the Guyana connection. The report said that the idea was to transport cut logs on chartered ships from Georgetown, to the New Mangalore Port and then to the Chikkamagaluru facility. Under this agreement, Daffco was planning to bring hardwood varieties such as Greenheart, Purpleheart, Wallaba and Bullet Wood to India.
Over the years of its existence here, Vaitarna had been accused of exporting logs without engaging in value-added forestry as had been promised.
The Hindu said that Siddhartha had once told reporters, “The idea of a furniture business [came] up in one of my morning walks through coffee estates. We have a lot of hardwood trees, silver oak, teak wood, rose wood and mahogany trees, in the estate, some of them fallen and getting wasted. I thought a venture around these dead trees would create jobs for hundreds of people.”
In the initial years, Daffco catered exclusively to the furniture and wood requirements of the group’s cafe and hospitality businesses. Later, the company expanded rapidly, getting into a wide range of furniture: modern, classic, ethnic, lounge, lifestyle, leisure and entertainment. It also manufactured all kinds of plywoods, wooden panels and beadings from wood waste and saw powder, the report said.In August, the Ministry of Natural Resources said it was to receive a report on the possible implications here of the death of Siddhartha, the owner of Vaitarna Holdings Private Inc. (VPHI), which controls forest concessions amounting to 737,814 hectares. There has been no further word from the ministry on this report but yesterday’s shutdown in India will likely raise questions about whether the company will continue operations here and what will become of the forest concessions.
According to reports in the Indian media, Siddhartha’s body was found more than a day after he went missing in August this year under suspicious circumstances.
He went missing from the Netravati dam site in Karnataka and his body was recovered 36 hours later at around 6:50 am local time by local fishermen. A note allegedly written by the businessman was found and appeared to suggest his death was a suicide. In the note he appeared to lament his failure to create the right business model after 37 years.
Café Coffee Day (CCD), through its Dark Forest subsidiary, in 2010 acquired the State Forest Exploratory Permit for 391,853 hectares of forest originally awarded in 2007 to US-based Simon and Shock International Logging Incorporated (SSILI), after buying out SSILI. Subsequently, Dark Forest acquired the 345,961 hectares concession which was originally assigned to Caribbean Resources Limited (CRL). The acquisitions by the Indian company had sparked concerns about transparency and other matters.
The company had been harvesting and exporting logs and there had been controversy about whether it was abiding with value-added obligations.
Siddhartha had said in 2012 that a processing centre for logs would be set up here but the main facility would be in India.
There had been concern about the company’s failure to fulfill promised value-added production but up to last year, the Ministry of Natural Resources said it was satisfied that VHPI had started “value added initiatives.” It had also said that the company was looking to ramp up lumber production. It is unclear whether this occurred.
