What led to the demise of CCD founder Siddhartha
CCD founder-owner VG Siddhartha, whose body was found on Wednesday from Netravati river in Mangaluru, had started selling his assets earlier this year, reports claimed. The entrepreneur, who was married to former Karnataka Chief Minister SM Krishna's daughter, hoped this would help him pay off the debts. But when things didn't improve, he called it quits, something which he mentioned about in his last letter.
India's "Coffee King" disappeared mysteriously, his body was found later
Siddhartha, who started CCD in the 90s after being inspired by similar models in other countries, was last seen by his driver Basavaraj Patil on a bridge over Netravati river. They were en route Mangaluru when he got off the car. After he went missing, a search operation was launched. More than 30 hours later, Siddhartha's body was found by fishermen.
Can't fight: In last letter, Siddhartha spoke about his problems
Before Siddhartha went missing, he wrote a letter to the CCD family telling about his problems. He revealed he borrowed a huge amount of money from a friend, six months ago. He also spoke about harassment by income tax officials and the pressure which private equity investors put on him. Siddhartha apologized for "letting down people" while adding that "he never wanted to cheat".
Understanding the issues which plagued CCD
With over 1,700 outlets in India and a couple of stores in countries like the Czech Republic Austria, Malaysia, and Egypt, CCD is one of the biggest success stories to emerge out of India. But off late the company's debt kept on increasing. Reportedly, in 2018-19, Coffee Day Enterprises registered a net profit of Rs. 128 crore on a turnover of Rs. 4,264 crore.
Coffee Day Enterprises was under debt of Rs. 10,000 crore
According to BloombergQuint, Siddhartha's company was under a debt of Rs. 10,000 crore. Earlier this year, Siddhartha sold his entire stake in Mindtree to L&T. The deal fetched him Rs. 3,269 crore, but the humongous amount of money still couldn't pay the debt. The report highlighted that some of the debt was raised by subsidiaries which didn't have enough revenue stream.
Siddhartha was eyeing a major deal with Coca Cola
Siddhartha and his investment firms owned some 54% in Coffee Day Enterprises. About 84% of it, which is actually 45.33% of the company's equity and is valued at Rs. 1,475.17 crore, is still pledged to lenders. In a last-ditch effort to pay the debts, Siddhartha was seeking a valuation of $1.45 billion from Coca-Cola Co. to sell a stake in Coffee Day.
While Siddhartha alleged harassment by taxmen, department refuted claims
Furthermore, Siddhartha claimed Income Tax department took possession of Coffee Day, despite the fact that they filed revised returns. This led to a liquidity crunch. However, the department said they launched an investigation against Siddhartha as per the law. In a statement, the department said he admitted that Rs. 362.11 crore of his income and Rs. 118.02 crore of Coffee Day's was unaccounted for.
CCD's leadership has a lot to deal with
The company is still under a debt of Rs. 7,000 crore and though Siddhartha listed assets which can be sold, it is not clear if that would be enough. Faced with numerous problems, the company said it wants to run the business smoothly.Share this timeline