The country’s biggest coffee king was once made from an intern, now his company is being sold

The country's biggest coffee king was once made from an intern, now his company is being sold


coffee day Coffee Day Global, which manages the coffee business of Enterprises Limited (CDEL), has assigned Ernst & Young (EY) the responsibility of conducting preliminary investigations on investment proposals in the company. CDEL has been in talks with private equity firms like KKR, TPG Capital and Bain since last year to sell stake in its coffee retail business. Presently the company is running 1,469 cafes and 59,400 vending machines. Last year, VG Siddhartha, the founder of the company, committed suicide due to heavy pressure from the lenders. Since then, the company is considering several ways to repay the huge debt.

CDEL Ltd. has inked a Rs 2,000-crore deal with private equity firm Blackstone to sell its IT park outside Bengaluru to pay off debt. Siddhartha’s family is in talks to sell nearly his entire personal assets, along with a 10,000-acre coffee plantation, to pay off the debt. It is believed that his entire assets will be around Rs 2,000 crore. The promoters, including Siddharth’s wife Malavika, hold 16.4 per cent in the company, up from 54 per cent till last year. Due to not being able to announce the financial results within the stipulated time, the trading of shares of the company was also banned in February. VG Siddhartha worked hard to get this company recognized globally. His journey has also been no less than a fantasy.

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VG Siddhartha was named by Forbes magazine as a new kind of business tycoon in the country. His family has been considered extremely wealthy and influential in Karnataka for many generations. Last year when he committed suicide, he wrote in a letter left behind that I am committing suicide due to failure in business. Everyone was shocked at this. He was born in Chikkamagaluru, Karnataka. His family has a huge estate of 350 acres. But, instead of family business, he chose his own path. Siddhartha did his Masters in Economics from Mangalore University. At the very beginning of his career, he joined the stock market. He worked as a Management Trainee at JM Financial Limited Mumbai from 1983 to 1985. He used to work here related to portfolio management and securities.

Siddhartha Returned to Bangalore after two years. His father gave him five lakh rupees to do business of his choice with the condition that if he is not successful, he will take over the family business. He bought a land in it for three lakh rupees and invested two lakh rupees in his security business. In this, he also added two lakh rupees saved during the job. Then he started a firm named Shivan Securities. Its name was changed to WetoWealth Securities Limited in 2000. Later its venture capital division was started as Global Technology Ventures.

VG Siddhartha became a full time investor in the stock market by 1985. He bought 10,000 acres of coffee farms. Liberalization came out in the coffee business in the 90s. During that time, he doubled his money through plantation in a year. After this he formed another company Amalgamated Beans Coffee Trading Company Limited. He formed this company in 1993 to focus on coffee exports. At this time 3,000 tonnes of coffee was being produced from his coffee plantation. At the same time, his coffee trading company was doing business of 20 thousand tonnes. Within two years, this company became the second largest exporter of coffee in the country.

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Siddhartha opened the first Cafe Coffee Day store in 1996 on Brigade Road, a congested area of ​​Bangalore. Where a coffee and an hour of internet surfing cost Rs 100. This was the period when Bangalore was changing and turning into an IT hub. After this Siddharth and his team expanded it tremendously. It became the largest coffee restaurant chain in the country. In addition, it was also the owner of Coffee Day Global and its subsidiary Coffee Day Enterprises. According to the Forbes list released in 2015, then VG Siddhartha’s total assets were estimated at Rs 8200 crore. Former Karnataka CM SM Krishna was his father-in-law. In such a situation, it was also surprising that why he did not use the influence of his father-in-law at the time of crisis.

At one time there was talk of selling Cafe Coffee Day’s stake with Coca-Cola. Cafe Coffee Day was hoping that by selling its stake to Coca-Cola, it would get Rs 8,000-10,000 crore. Siddhartha also had shares of many other companies. He was on the board of directors in several companies, including GTV, Mindtree, Liquid Crystal, WeToWealth and Ittium. Larsen & Toubro also bought 20 per cent shares of Cafe Coffee Day and Mindtree for Rs 3,210 crore. Coffee Day Enterprises had a debt of Rs 6,547 crore as of March 31, 2019, which was about 2.5 times their total assets of Rs 2,529 crore then. However, there were also reports that the debt had reduced significantly after the sale of stake in Mindtree.

Income tax raids were conducted on many of his offices and premises in 2017. According to the Income Tax Department, they had received such documents, from which it was clear that the company has not disclosed the accounts of 650 crores. These raids troubled Siddhartha. He was under pressure from private shareholders. During this time he took a big loan from a friend of his. After this, last year he committed suicide under heavy pressure from the borrowers.

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Tags: business, Karnataka, retail company, Retail segment, Retail stores, Stake


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