New Delhi: He wanted to be an investment banker and had little interest in his family’s coffee business. But a chat with the owners of German coffee chain, Tchibo, got V.G. Siddhartha to set up the Indian rival of Starbucks, before debt and tax woes allegedly led him to end his life.
Siddhartha, the founder of India’s biggest coffee chain, Cafe Coffee Day (CCD), was confirmed dead on Wednesday, days after he went missing. A purported letter written by him indicated that pressure from banks, investor and tax authorities drove him to end his life.
The letter purportedly written by Shri VG Siddhartha which is circulating is dated July 27th.
I received a call from him on the 28th asking if we could meet up.
It’s unbelievable that a courageous man like him would resort to this. pic.twitter.com/bXcJhHz0QS
— DK Shivakumar (@DKShivakumar) July 30, 2019
Coming from a family that has a 140-year history of growing coffee, Siddhartha, around 60, initially dabbled in stock trading and wanted to work as an investment banker in Mumbai after completing his Master’s degree in economics from Mangalore University.
Also read: CCD Founder V.G. Siddhartha Reported Missing, Blames Taxman for Harassment in ‘Letter’
In 1984, he launched his own investment and venture capital firm Sivan Securities in Bengaluru and began investing the profits from his start-up to buy coffee plantations in Karnataka’s Chikmagalur district.
Around this time, he also began taking interest in his family’s coffee business. In 1993, he set up a coffee trading company called Amalgamated Bean Company (ABC) with an annual turnover of over Rs 6 crore and over the years it increased to over Rs 2,500 crore.
I am indirectly related to VG Siddhartha. Excellent human and brilliant entrepreneur. I am devastated with the contents of his letter. The Govt Agencies and Banks can drive anyone to despair. See what they are doing to me despite offer of full repayment. Vicious and unrelenting.
— Vijay Mallya (@TheVijayMallya) July 30, 2019
Inspired by a chat with the owners of Tchibo, the German coffee chain, Siddhartha decided to open his own chain of cafes in a country that had no formative cultural grounding in cappuccinos. He opened Cafe Coffee Day’s first outlet on Bangalore’s upscale Brigade Road in 1994 with a tag line ‘A lot can happen over coffee’.
It’s now the largest chain of coffee shops in India, a nation of tea drinkers, with 1,750 cafes in more than 200 cities, including outlets in Prague, Vienna and Kuala Lumpur. Coffee Day went public in 2015.
Siddhartha currently has 200 exclusive retail outlets selling his brand of Coffee Day powder all over south India. ABC is also India’s largest exporter of green coffee.
Expanding his business portfolio, Siddhartha ventured into IT sector and founded Global Technology Ventures Ltd that identifies, invests and mentors technology companies.
I did not know him & have no knowledge of his financial circumstances. I only know that entrepreneurs must not allow business failure to destroy their self-esteem. That will bring about the death of entrepreneurship. https://t.co/H4ysr8Ov3U
— anand mahindra (@anandmahindra) July 30, 2019
He also entered the financial sector with investment firm Sivan Securities Private Ltd. The company has three subsidiaries, Chetan Wood Processing Pvt Ltd, hospitality business Barefoot Resorts and for timber trading, the Dark Forest Furniture Company.
In 1999, Siddhartha was roped in by IT veteran Ashok Soota when Subroto Bagchi, Rostow Ravanan and K.K. Natarajan were putting together the IT firm Mindtree.
He was once the largest shareholder of Mindtree but decided to cash out. In March this year, he sold out his 20.41% stake in MindTree to Larsen & Toubro (L&T), making close to Rs 2,858 crores profit. That deal helped him repay his debt of about Rs 2,900 crore.
Son-in-law of former Karnataka chief minister S.M. Krishna, Siddhartha found himself in trouble in September 2017, when the Income Tax (I-T) department conducted raids at over 20 locations linked to him.
If VG Siddhartha letter is genuine (yet to be verified), then it only confirms what bizmem have been saying for a while now: tax terrorism is taking us back to the past, retarding investment/growth. And if this can happen to the son in law of SM Krishna, god help small bizmen.
— Rajdeep Sardesai (@sardesairajdeep) July 30, 2019
Siddhartha reportedly had been witnessing rising debts, especially in the last few years.
His Coffee Day Enterprises Ltd had seen net loss widening to Rs 67.71 crore in the fiscal year ended March 31, 2018, from Rs 22.28 crore loss in the previous year. This despite revenues climbing 59% to Rs 122.32 crore.
He was reportedly in talks to sell his real estate venture Tanglin Developments Ltd to New York-based private equity giant Blackstone Group.
The MindTree sale had vastly improved his financial condition and the real estate deal would have further cut his debt. He was also in talks to sell Coffee Day Enterprises, where he held 32.75% stake, to Coca-Cola for as much as $ 1.45 billion.
And so his sudden disappearance from Jappinamogaru, which is very close to Netravathi river and three kilometers from the sea, on Monday evening has left questions unanswered.
I have never met VG Siddhartha, never knew him. But it pains me that someone who has built a business from scratch, provided jobs and joy to so many should have to end his life like this. I hope he is okay, wherever he is. I hope the company he built comes out this unscathed.
— Pritish Nandy (@PritishNandy) July 31, 2019
A letter by him to the CCD board claimed that he was being pressured by “one of the private equity partners” forcing him to buy back shares, a transaction he had partially completed six months ago by borrowing a large sum of money from “a friend”.
The letter also talked about “harassment” by I-T Department official, who initially attached his shares in Mindtree.
The I-T Department on its part refuted the charges made out in the letter saying the signature on it does not match with the record available with it.
His wife, Malavika Hegde, with whom he has two children, is on the CCD board.
“Company is professionally managed and led by a competent leadership team, which will ensure continuity of business,” the CCD Enterprise said in a regulatory filing.
(PTI)