New Delhi/Mumbai: V. G. Siddhartha, the man who founded India’s biggest coffee chain more than a decade before Starbucks Corp. entered Asia’s third-largest economy, has died, police said.
Siddhartha went missing on Monday after he went for a walk near a bridge close to the southern Indian city of Mangaluru. His body has been found, the city’s police commissioner Sandeep Patil said on Wednesday.
The body was found in the Netravati river in Dakshina Kannada district of Karnataka after 36 hours of intense search, a PTI report quoted officials as saying. It had washed ashore near Ullal and was fished out by local fishermen. A fisherman had on Tuesday claimed that he saw someone jumping off the bridge.
Mangalore MLA U.T. Khader said friends and relatives have confirmed that the body is of Siddhartha.
Patil said the body has been kept at Wenlock Hospital for further formalities, PTI reported.
Coffee Day Enterprises Ltd., a company Siddhartha founded, on Tuesday released a letter purportedly written by him to the board about “succumbing to the situation” because of pressure from lenders, one of the private equity partners, and harassment by tax officials. Coffee Day’s external media representatives on Wednesday said they couldn’t immediately comment.
Also read: Gave it my all, sorry to let you down: What CCD founder wrote in purported letter to staff
The company’s shares plunged by the 20% limit in Mumbai. Siddhartha whose cafe network traces its roots to the IT hub of Bengaluru in 1996, didn’t return after telling his driver he was going for a walk on Monday.
Siddhartha and other founders of Coffee Day pledged about 76% of their holdings as collateral, according to filings. The debt burden prompted him to start selling assets earlier this year. In April, he sold a 20% stake in software services firm Mindtree Ltd. to engineering giant Larsen & Toubro Ltd. He was seeking a valuation of as much as $1.45 billion from Coca-Cola Co. to sell a stake in Coffee Day, the Economic Times newspaper reported last month.
“I gave it my all but today I gave up as I could not take any more pressure,” according to the letter dated July 27. The harassment by tax officials and pressure from lenders led to a “serious liquidity crunch.”
The company is taking help from concerned authorities, and its leadership team will “ensure continuity of business,” Coffee Day said in an exchange filing on Tuesday.
Shares of Sical Logistics Ltd., another company where Siddhartha’s family is a large investor, also plunged 20%. Sical had total debt of 11 billion rupees at the end of March, while loans at Coffee Day jumped 29% from a year earlier to 65.5 billion rupees, according to data compiled by Bloomberg.
Coffee Day went public in 2015, nearly two decades after opening its first cafe in Bengaluru, selling shares at 328 rupees apiece. A unit of private equity firm KKR & Co. owns 6.07% of the company, while Nandan Nilekani, co-founder of Infosys Ltd., has a 2.69% stake.
Coffee Day has about 1,700 outlets, 10 times more than Starbucks runs in the nation, according to the National Restaurant Association of India.
“We are deeply saddened by the developments and our thoughts are with his family at this time,” KKR said in an email. The fund sold 4.25% of its holding of about 10.3% last February and haven’t sold any shares before or since, according to the email.
Siddhartha, who began his career as an investment banker, had sleepless nights when Starbucks entered India, according to an article he wrote for the Outlook magazine in 2016.
He had a “miserable moment” when Coffee Days stock tanked at its debut, giving him “quite an ego blow,” he wrote in the column.
Siddhartha went missing mysteriously on Monday night en route to Mangaluru.
Teams of National Disaster Response Force, Coast Guard, Home Guard, fire services and coastal police scoured the waters under a bridge across the swollen Nethravathi river, where the 60-year old was reportedly last seen, to trace him.
Siddhartha, also the son-in-law of former Karnataka chief minister and BJP leader S M Krishna, was last seen near the bridge in Kotepura area on Monday night, police said.
Siddhartha had left Bengaluru for Sakleshpur in Hassan district in a car on Monday afternoon, but on the way had asked his driver to go towards Mangaluru, the police said.
On reaching the bridge, he got off the car and told his driver he was going for a walk.
With inputs from PTI.
Also read: How Siddhartha turned Cafe Coffee Day into a multi-billion dollar ‘success story’
Many Indian Industrialists who are today lauded as successful entrepreneurs have built their empires with the bank loans that are now part of NPAs of Banks. These NPAs are ultimately to be paid by tax payers money. V G Siddhartha had the overdose of success and ignored the risks that capital markets carry. Same applies to those who extend loans against equity shares.
A business organization success should depend on fundamentals and not it’s market capitalization. Shares of many companies are mindlessly over priced and one should get a surprise if these shares see the light of reality. Indian capital market has become mainly investors’ sentiments driven indicating bad business practices. A company splits it’s shares with 1 to 5 and then issues bonus of 1:1. It effectively increased the number of shares by 10 fold. Logically the share price should have gone down by 90% but it goes down only by 10%. What’s going on? It’s plain deception and consequences would follow if not today, it may be tomorrow. Many more Siddharthas would commit suicide.
Vijay Mallya has tweeted his condolences. Pointed out how he is willing to clear all his dues. The dominant concern – whether it is recovery of bank loans, with or without interest, or tax dues – should be to maximise the percentage of recovery and to privilege the here and now over the future. See where pragmatism has taken the Chinese economy.
It is unfortunate that the owner of CCD Siddhartha had the backing of 130 year old Cofffee business legacy but ended in debt trap which made him to jump into the river imagine the plight of poor farmers who are also in same situation forcing them to give up lives but rarely get space in Media headlines. From Cofffee to Coffin it is indeed a sad end.
Tragic. Rest in peace. 2. Shri V G Siddhartha’s farewell note now has the legal force of a dying declaration. Sufficient to book B R Balakrishnan, who retires today, for abetment to suicide. 3. After watching Cut the Clutter. If tycoons are being driven to despair, consider how difficult life has become for the average Indian, a cotton farmer from Vidarbha, a construction worker in NCR who lost his job after demonetisation and has still not got it back. The Josh has never been lower.
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