CCD founder Siddhartha started selling assets this year

Business

31 Jul 2019

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.

What happened

India's "Coffee King" disappeared mysteriously, his body was found later

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.

Letter

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".

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Problems

Understanding the issues which plagued CCD

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.

Debt

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.

Coca-Cola

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.

Harassment

While Siddhartha alleged harassment by taxmen, department refuted claims

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.

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Most asked questions

How much debt is CCD under?

Who founded CCD?

Who is CCD's new chairman?

Where was VG Siddhartha's body found?

More questions

How much debt is CCD under?

Asked 2019-07-31 20:37:13 by Hansika Rao

Answered by NewsBytes

CCD is under a debt of Rs. 10,000 crore.

Who founded CCD?

Asked 2019-07-31 20:37:13 by Hansika Mistry

Answered by NewsBytes

CCD was founded by VG Siddhartha in the 1990s.

Who is CCD's new chairman?

Asked 2019-07-31 20:37:13 by Shaurya Rao

Answered by NewsBytes

SV Ranganath has been appointed CCD's interim chairman.

Where was VG Siddhartha's body found?

Asked 2019-07-31 20:37:13 by Angel Khan

Answered by NewsBytes

VG Siddhartha's body was found near Netravati river.

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