Story of CCD Owner | How V.G Siddhartha Died

Founder Of Café Coffee Day | Everything About VG Siddhartha

7 Min Read |  May 06, 2021

FinnovationZ Convey

What leads a person to commit suicide?

Is it because they are cowardly?

Or is it because they wanted to run away from their problems?

There are different reasons for it. Generally, people have a belief that running away from your problems is not good. You have to face them. But what if the problems are building up like a mountain in your life?

This is what happened with V.G Siddhartha. He was known as the coffee baron of India.

Founder of Café Coffee Day, also known as CCD, has been a favourite hangout spot for people for many years. Café coffee day is not just a brand name, it’s a part of people’s life.

As many of us might have bunked classes and went to CCD, many of us had our first dates over there, not only that it’s a great spot for having business meetings as well.

But, the question that keeps on arising is that what might have led to the death of its founder?

With its company reaching its height, with a total of 1700+ outlets in India only. CCD has been globally ruling itself by its presence in more than 6 countries. It has been stated that Café coffee day serves around 1.8 billion cups of coffee annually in six countries.

How incredible it is!

V.G. Siddhartha: Background

V.G Siddhartha was a very generous man. He said,

Name is more important than money.

A person with so much sincerity and generosity considered himself a failed entrepreneur. V.G. Siddhartha had coffee running in his veins. Being brought up by a family of coffee plantation owners from the Chikmagalur district of Karnataka. He had completed his Master’s degree in Economics from the Mangalore University of Karnataka.

Already being a son of a coffee plantation owner, Siddhartha's family had a good business in this field with 350 acres of his family-owned coffee estate.

Being ambitious kept him motivated.

Siddhartha thought of starting something of his own, something which he could create, and something that can be appealing to him as well as to other people.

Seeing how ambitious he was, Siddhartha's father gave him Rs. 5 lakhs to start building up his ambition, and if failed, the family business was always open for him. With such a positive response from his father, he initially bought a piece of land for 3 lakhs and kept the remaining in the bank.

After that, he came to the city of dreams, Mumbai.

He lived in a Dhaba Hotel. Later the next day of his arrival in Mumbai, V.G. Siddhartha went to Mahendra company of JM Financial Services, now known as JM Morgan Stanley. After a healthy discussion, he got the opportunity to work there as a management trainee/intern in the Indian stock market.

With his gaining knowledge in the world of investing, Siddhartha later handled the accounts of big business houses. Kampani praised him a lot and he used to train him personally as well. He once said that it was due to his wise words that he ended up starting his own coffee estates.

After working for two years in JM financial and gaining so much expertise, Siddhartha was finally ready to start something of his own. Later, he moved back to Bangalore after two years, and with his remaining Rs 2 lakhs, he decided to start his own financial firm.

But during that period, the stock market had crashed and he went on to look for a new investment opportunity that would bring him good profits and returns. He bought a stock market card for 30,000, and along with it, he took over a company called Sivan Securities. This company later came to be known as Way2Wealth Securities Limited in 2000.

Formation of Cafe Coffee Day

With a span of 10 years, Siddhartha came across a German business owner.

His leading brand was Tchibo, and this owner was interested in buying the coffee beans from Siddhartha.

Listening to German’s inspiring story of starting his brand in a small 10ft shop and now had grown into a multi-million dollar business had left him awestruck.

Being such a small company and establishing itself in such a big firm, which is now known as the second-largest coffee roaster in Europe, developed a thought in Siddhartha’s mind.

According to him, this inspiring story changed his outlook of the world altogether and had opened his eyes.

Due to such inspiration, he opened Amalgamated Bean Coffee (ABC), a trading company that exported coffee in 1993. The company grew in a good way.

Within a span of two years, ABC company became India’s largest coffee exporter with an annual turnover of Rs 6 crores. With the success of ABC company, Siddhartha was ready as well as scared to face up challenges.

He was scared, as whenever there is a hoax regarding an improving economic climate of India, Big Europeans and US Trade houses stepped in and built their own brand as a competition.

Due to which he thought of building ground outlets that would be an unsolvable business plan. But at that time, high import, export duties and government policies made it difficult for the Indian coffee planters to keep the prices low. Therefore, Siddhartha took charge and aimed to change this scenario in India.

And yet, he succeeded.

He came to New Delhi, convinced the Union Government. And just, with a snap of fingers, the high prices came down drastically. With an ample amount of research done to build up coffee stores for selling branded coffee powder, the risk factor was increasing.

Later, when he decided to leave this plan and start something else, something which entails a better survival plan, then in 1995, the trend of Café’s began globally and he just got lucky.

This has been a perfect opportunity for him, which he grabbed. He decided to make a cyber café with coffee and the internet together. And, the year 1996 saw the establishment of Cafe Coffee Day

The first Café Coffee Day outlet was opened in Bangalore on the Brigade road, with its tagline ‘A lot can happen over a coffee.’ Café Coffee Day or CCD soon became a hangout spot for people, especially among the youth.

After seeing its success, he soon opened more outlets. CCD was reaching its success. With new products and the inclusion of food items, it has ruled over the hearts of people.

Today, CCD has around 1,700 cafes, around 60,000 vending machines, more than 3,000 employment, 532 kiosks and 403 ground coffee selling outlets. Apart from his coffee business he also had different businesses like real estates, logistics, financial services etc.

What Led to the Demise of V.G Siddhartha? 

Have you ever been in debt?

Have you ever felt the need for money urgently, and you don’t have that much amount so you take that amount from someone?

That is how a bill of debts starts to establish. Being in debt can be extremely stressful.

As a person’s mind is constantly blocked with the thought of the repayment of debt.

Do you always have a fear of what will happen if I don’t repay the debt?

This fear is constant, until the repayment. But for some, especially big businessmen this debt can be a dangerous thing. Debt is such a vulnerable thing that it can kill a person. Well, this is what led to the demise of V.G Siddhartha.

Coffee Day enterprises which are known as the holding company of Café coffee day, was in great debt. In March 2018, it had Rs 4411 crore debt and by March 2019 this increased to Rs 6547 crores. This led to financial stress.

Not only this, his other companies like, Devadarshini Info was under Rs 1171 crore debt and Gonibeedu Coffee estate was under Rs 775 crore debt. Out of which Rs 1028 crore debt was personally guaranteed by him of the Coffee day enterprise.

The total debt had now reached Rs10,000 crore, out of which Coffee day enterprise had Rs 6547 crore debt. To get aid from these debts, he started giving most of his shares to banks so that he could use the money to clear off some debt.

But it’s not thousands of debts we are talking about, it was a debt of crores, which is not that easy to clear off.

Due to this, in the stock exchange, he sold his 20.41% stocks of an IT company, Mindtree. With this, he earned Rs 3200 crores, which helped him to clear off some loans. But again, this was not sufficient.

He was continuously planning to work this out. He even thought to sell off the Coffee day enterprises stakes to Coca-Cola. All these debts were recent debts. But the main story starts in 2017.

In 2017 his offices in 20 locations were raided by the Income Tax department. The IT department recovered Rs 362 crore of uncounted income. Thus, he even did tax fraud. He was under a mountain of debts. He had given the majority of its shares.

Due to which he even bought short-term loans, to clear off its long term debts. Availing short term debts for clearing long term debts are quite risky. These short term loans, themselves come with high interest. So much pressure, so much financial tension he had faced.

He was drowned in the debt trap so much, that he found suicide to be the only option. And thus, on 29th July’19, Siddhartha was reported to be missing from Bengaluru.

He headed to Sakaleshpur. While on his way, he informed his driver to make a stop at the Netravali River in the Kotepura area in Dakshina Kannada district.

He got down from his car and told the driver that he is going for a walk. When it had been more than two hours and he didn’t arrive, the driver panicked and approached a missing complaint.

More than 200 people were involved in the search rescue mission. 25 boats carried out search operations for him.

Sniffer dogs were also brought to the spot. Fishermen were also allotted the search task. Police considered that this was a suicide case and that he had jumped over the river. But the body was yet to be discovered.

After about 36 hours of the intense search mission, finally, his body was recovered by three fishermen near the Hoagie Bazar. Police had also recovered a letter which he had written for the board of directors and its employees, stating:

'To our Board of Directors and Coffee Day family,

After 37 years, with a strong commitment to hard work, having directly created 30,000 jobs in our companies and their subsidiaries, as well as another 20,000 jobs in Technology Company where I have been a large shareholder since its founding, I have failed to create the right profitable business model despite my best efforts.

I would like to say I gave it my all. I am very sorry to let down all the people that put their trust in me. I fought for a long time but today I gave up as I could not take any more pressure from one of the private equity partners forcing me to buy back shares, a transaction I had partially completed six months ago by borrowing a large sum of money from a friend. 

Tremendous pressure from other lenders leads to me succumbing to the situation. There was a lot of harassment from the previous DG income tax in the form of attaching our shares on two separate occasions to block our Mindtree deal and then taking the position of our Coffee Day shares, although the revised returns have been filed by us. This was very unfair and has led to a serious liquidity crunch.

I sincerely request each of you to be strong and to continue running these businesses with new management. I am solely responsible for all mistakes. Every financial transaction is my responsibility. My team, auditors and senior management are totally unaware of all my transactions. The law should hold me and only me accountable, as I have withheld this information from everybody including my family.

My intention was never to cheat or mislead anybody, I have failed as an entrepreneur. This is my sincere submission, I hope someday you will understand, forgive and pardon me.

I have enclosed a list of our assets and the tentative value of each asset. As seen below our assets outweigh our liabilities and can help repay everybody.'

His suicide created a huge depression in his family. Financially, Café Coffee day stock price went down drastically. CCD had run into losses of Rs 7,000 crore.

But apart from all this, CCD decided to shut down across the country in memory of its founder, Mr V.G Siddhartha.

Bottom Line

Suicide is definitely not an option to end your problems.

Life is precious and it might get extremely difficult to bear, but ending it is not a solution. Siddhartha might have left us, but his legacy still remains. Apart from being in debts and frauds, He has always managed to make his customers happy. With great coffee and happiness, he came to be known as the coffee king and coffee baron.

A lot has happened over a coffee, and a lot will continue to happen over a coffee.

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