Bengaluru: Frantic search operations had been launched to find him after the son-in-law of the former Karnataka Chief Minister SM Krishna and Cafe Coffee Day founder VG Siddhartha after he went missing from Netravati river bridge in Mangalore. His body was recovered from the same river by a group of fishermen. The police called his family members to the hospital where he was moved to confirm his identity.
Now, the big question everyone seems to be asking is why and when did the perfect coffee brew turn bitter? Wasn't CCD one of the coolest hangouts for every college student? The answer is a big YES! As per reports, as of March 2019, the CCD has 1752 cafes and 60,000 vending machines all over India. The chain has global presence too in countries like Nepal, Egypt, Austria and Malaysia.
The growth of India's first coffee chain appeared to be making brisk business until yesterday after a letter written by VG Siddhartha to the CCD board members surfaced. In the letter, he apologises to them stating that he never meant to cheat anybody. He also goes on to state that he had failed as an entrepreneur. This has deepened the mystery surrounding the circumstances that drove him to take the extreme step.
Now, was rising debts a reason for his suicide?
First, what happened soon after VG Siddhartha disappeared? The immediate impact was on the CCD shares which tanked 20%.
The Coffee chain wrote a letter to the National Stock Exchange and the Bombay Stock Exchange about the latest development of its chairman having gone missing. Interestingly, besides other things VG Siddhartha had also mentioned in his letter about the 'tremendous pressure' from lenders.
What rang the alarm bells and lent a new twist to the disappearance saga are the lines in his letter where he admits to have kept his family and CCD team in the dark about his transactions.
Besides Coffee retailing, Coffee Day Enterprises also has tech parks, SEZs, logistics and investments. As per reports CCD's parent company Coffee Day Enterprises is neck-deep in debt. As per Centre for Monitoring of Indian Economy, the total debts of Coffee Day Enterprises stood at Rs 6547 crore as of March 2019. CCD also reported a standalone loss of Rs 67 crore in the same period. The promoters had already pledged 75% of their stakes by then.
To add to their woes, the income tax department conducted a raid across 25 locations owned of CCD and VG Siddhartha. In September 2017, the IT officials had declared that VG Siddhartha had concealed income of over Rs 650 crores.
So the CCD founder was badly in need of money not only to ease his debts. He had also sold his entire stake in Mind Tree to L&T earlier this year for a whopping Rs 3269 crore. He had been associated with the Bangalore based IT company for nearly 20 years.
There was also a buzz in business circles that Coca Cola was planning to invest in the Indian Coffee retail market worth Rs 2500 Crores. Business analysts say that the deal could have enhanced the value to around Rs 10,000 core.
There were also reports that VG Siddhartha who had initially intended to sell Blackstone, his real estate company for around Rs 2800 crore later dropped the idea. As per reports, another real estate developer Salarpuria Sattva and Blackstone were in advanced talks with VG Siddhartha to buy the Global Village Tech Park in Bengaluru which also houses Mind tree among other IT firms.
After all these business transactions fell through, Siddhartha badly needed money to expand his chain. The presence of new players in the market like Tata Starbucks, Costa Coffee only made competition fierce. On the other hand, entry of exclusive tea outlets like Chaayos and chai point did not make it any easier for him.
So, VG Siddhartha carried out a lot of transactions which he kept under wraps. With debts mounting, it could be possible that he had no choice but to take the extreme step of committing suicide.