The life and death of Cafe Coffee Day owner VG Siddhartha

V.G.Siddhartha would not have died if he hadn’t been the son in law of SM Krishna

Netravati river usually flows very slowly near Jappinamogaru-Mangalore as if it is reluctant to join the sea. But during high monsoon its like a flood. The sea is just a few kms away from there. Siddartha wanted to meet the sea of success in the corporate world, though he started as a very small entrepreneur from western Ghats from where rivers like Netravati take origin. In life, to most people, Siddhartha was only known as the son-in-law of the important politician, SM Krishna. To the outside world, his empire was only an off-shoot of SM Krishna’s political power. He often stands as an example of the nepotism of those in power, the interests of businessmen who fund political battles, and business that transgresses government rules and regulations. But that’s not all Siddhartha is. Siddhartha was born to Chatnalli Gangayya Hegde, in Malnad. His is a story of an ambitious young man in an ordinary family, rising to heights, and killing himself in order to exit the insides of the corporate system. His journey cannot be understood with superficial details. 

When this author visited Mudigere a few years back, something surprising took place. One of the comrades, who organized the coffee plantation workers there, spoke of Siddhartha Hegde with immense pride. According to him, most workers at ABC company’s estate were getting the facilities which were otherwise the maximum demands of the workers’ movements at that time. Probably the workers’ demands themselves were so minimum. And it is also because if rich businessmen possess basic simplicity and compassion, people are satisfied. Those businessmen become idols for the public. Due to Siddhartha’s simple ways, and for the way he used a very small share of his profits for the benefit of the general public, he did not have many critics in the Chikmagalur district.

Siddhartha studied Economics in St. Aloysius College in Mangalore. In one of his interviews, he claimed that he read Marx in the communist library next to Aloysius college, but he always believed that like other corporates, that he must first generate wealth. After his degree, he went to Mumbai and trained under Mahendrabhai in Lonavala. He realised the importance of the stock market in its early days, in the ‘80s. After spending two years in Bombay, he received 7.5 lakhs from his father, returned to Bengaluru and started ‘Shivan Securities’. He bought 60,000 shares of Infosys and sold it all when its value had increased 6 times. Then, he took on the coffee plantation, during a time when coffee rates were low. In 1992, the regulations over coffee were lifted and its value quadrupled. By 1993, the coffee plantation had expanded to 3000 acres! Thus, the ABC company was born. Its turnover went from Rs. 6 Crore to Rs. 2500 crore by 2015. By 1995, it had grown into one of the largest coffee exporters in the country. In the next few years, he continued to expand through Mindtree Software, Chetan Wood Processing Pvt Ltd, Barefoot Resorts and Dark Forest Furniture. He also got married to SM Krishna’s daughter, Malavika.

A chance meeting with a third-generation coffee seller from Germany inspired him. Soon, 20 Coffee Day shops propped up in various parts of South India. Rather than selling coffee beans, they would sell coffee powder, at a significant profit. Later, inspired by Beer Cafe in Singapore, he started an internet cafe with his friends on Brigade Road. That’s how Cafe Coffee Day was born. Now, there are over 1500 cafes and over 600 shops across the country. By then, his father-in-law became the Chief Minister of Karnataka. He took advantage of this situation and expanded. He moved his company to the Mumbai Stock Exchange. Meanwhile, SM Krishna became the Governor of Maharashtra in 2004, and later, the Union Foreign Minister in 2009. 

In 2011, he entered the shipping business. His circles now claim that he was pushed to suicide due to his attempts to acquire a company that owned 70% of the global market. By 2015, Siddhartha had encountered a major crisis. He was stuck within debts for some of his companies. To solve these problems, he simply had to sell the shares of his reputed brands: Cafe Coffee Day and Mindtree. Apparently, Cafe Coffee Day was being negotiated to be sold to Coca Cola; 20% of Mindtree’s shares were sold to L&T. This was when the IT problem began, he wrote in his last letter. The Income Tax Department began to attach his assets and transactions. This closed the only available route to set his business right. Siddhartha’s letter states that he then conducted transactions that his family and top business officials have not been privy to. While the Ministry of Corporate Affairs marks his debt at Rs. 8,000 crores, CCD circles claim it could be anywhere between Rs. 10 thousand crores to Rs. 15 thousand crores.  

The government currently in power abandons rules to help such entrepreneurs; it puts out a red carpet to make corporations comfortable. However, why these problems were not resolved even after SM Krishna’s joined BJP remains a mystery. In fact, the IT Officer, supposedly Arun Jaitley’s confidante, is accused in Siddhartha’s letter. How was an entrepreneur with a 12000-acre estate, a stock exchange company, and an influential father-in-law still unable to solve his financial crisis? More information may shed light on this baffling question in the coming days. 

His empire, it must be noted, led to the creation of around 50,000 jobs. Coffee Day sustained the livelihoods of many in Karnataka. On one of his frequent visits to Kolkata, he is said to have stepped into his own Cafe Coffee Day in uniform, to serve coffee. He saw the way that they treated workers: nobody said thanks, no ‘Happy New Year’s, no smiles. He wondered how the staff would maintain their enthusiasm in such an environment, and empathized with their predicament. Siddhartha had a delicate personality; he generously helped schools in Malnad and Chikmagalur. He was known, not only as the son of Gangayya Hegde but also as the son-in-law of SM Krishna.

However, the cracks within his business brought him down, as he himself once said

“It’s true that his holding company had a loan of Rs. 1000 Crore; this debt was incurred to buy the shares of Sequoia Capital and Goldman Sachs in Retail. Another Rs. 200 Crores was borrowed to buy more shares of Mindtree. If we sold our Mindtree shares, the entire company’s debt would be taken care of. But we do not wish to sell the company, it has brought us 40% profit in the last 16 years.”

Apart from having problems in his business, this situation highlights the extent to which Siddhartha was being squeezed out by the IT department and his creditors. These problems exist even for Gujarati businessmen, but Gujarati politicians are currently in power in Delhi and can assist them. Perhaps the Gujarati politicians did not help resolve Siddhartha’s crisis in order to undermine his influential father-in-law. In a crony, capitalist world, there are a growing number of people who are willing to go to any lengths to ease their wealth. Perhaps, due to his sensitive personality, Siddhartha Hegde was unwilling to play by the crooked rules of this game. As someone who set out to achieve great things, discovering his status as a failed entrepreneur perhaps incited his death.

In an interview with a journalist, he himself said almost prophetically, “Entrepreneurs don’t retire. They die.”

 

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