Liquidity crunch pushes Café Coffee Day founder to death

VG Siddartha letter lists assets that can cover debt

234
Siddhartha
VG Siddhartha, founder-chairperson Cafe Coffee Day

The Café Coffe Day (CCD) founder-chairman, VG Siddhartha, who was missing for the last two days, was found dead and his body was recovered today early morning [31 July 2019] from the Nethravathi River near Mangaluru – 350 kilometers from Bengaluru – following a massive search operation lasting approximately 30 hours. Siddhartha was in the news for the past several months due to his debt and tax liabilities. We also recently reported that Coca-Cola plans to acquire CaféCoffee Day. CCD was in talks with Coca-Cola to sell some of its equity, although Siddhartha intended to keep the controlling stakes with himself. The CCD and Coca-Cola deal was still in the negotiation phase.

To reduce his financial burdens, Siddhartha sold his 20.32% stake in two CCD affiliate firms (Coffee Day Enterprises Ltd. and Coffee Day Trading Ltd.). He also divested his shareholding in software services company Mindtree to Larsen and Toubro earlier this year for Rs 3,200 crore.

However, recent reports reveal that CCD shareholders had doubts about the CCD’s debt. The Mindtree deal was supposed to be a lifesaver for reducing the company’s debt but it didn’t turn out to be so. There were questions from investors on the relatively high debt as well the unusually high cash held by the company’s realty subsidiaries. While the questions about debt continued, the answers from CCD were apparently unconvincing.

Siddhartha mentioned in his last letter addressed to the Café Coffee Day board of directors and the Coffee Day family, that he gave up as he could not take any more pressure. He wrote, “I have failed to create the right profitable business model despite my best efforts. I fought for a long time but today I gave up as I could not take any more pressure from one of the private equity partners forcing me to buy back shares. There was a lot of harassment from the previous DG income tax in the form of attaching our shares on two separate occasions to block our Mindtree deal and then taking position of our Coffee Day shares, although the revised returns have been filed by us. This was very unfair and has led to a serious liquidity crunch.”

He took the responsibility for all the financial transactions and mentioned in the letter, “The law should hold me and only me accountable. My intention was never to cheat or mislead anybody, I have failed as an entrepreneur.” He enclosed a list of assets and the tentative value of each asset with his letter. According to him, the assets outweigh the company’s liabilities and can help to repay all debts.

Packaging South Asia — resilient, growing and impactful — daily, monthly — always responsive

The multi-channel B2B in print and digital 17-year-old platform matches the industry’s growth trajectory. The Indian, South Asian, Southeast Asian, and Middle East packaging industries are looking beyond the resilience of the past three years. They are resuming capacity expansion and diversification, with high technology and automation in new plants and projects.

As we present our 2024 publishing plan, India’s real GDP growth for the financial year ending 31 March 2024 will exceed 6%. The packaging industry growth will match the GDP growth in volume terms and surpass it by at least 3% in terms of nominal growth allowing for price inflation in energy, raw materials, consumables, and capital equipment.

The capacity for flexible film manufacturing in India increased by 45% over the past four years. With orders in place, we expect another 20% capacity addition in 2024 and 2025. Capacities in monocartons, corrugation, aseptic liquid packaging, and labels are grown similarly. As the consumption story returns over the next six months, we expect demand to return and exceed the growth trajectory of previous years. The numbers are positive for most of the economies in the region – and as shown by our analytics, our platform increasingly reaches and influences these.

For responsible and sustainable packaging, with its attendant regulations and compliances, there is significant headroom to grow in India and the region. Our coverage includes the entire packaging supply chain – from concept to shelf and to waste collection, sorting, and recycling.

We target brand owners, product managers, raw material suppliers, packaging designers and converters, and recyclers. This is a large and complex canvas – the only thing that can work is your agile thinking and innovation together with our continuous learning and persistence.

The coming year looks to be an up year in this region, and this is the right time to plan your participation and marketing communication – in our rich and highly targeted business platform with human resources on the ground. Share your thoughts and plans to inspire and mobilize our editorial and advertising teams!

For editorial info@ippgroup.in — for advertisement ads1@ippgroup.in and for subscriptions subscription@ippgroup.in

– Naresh Khanna (25 October 2023)

Subscribe Now
unnamed 1

NEWSLETTER

Subscribe to our Newsletter

Previous articleCompostable food service packaging market study for 2019-2029
Next articleBisleri implements Denipro spiral conveyor system at Andheri plant
Technical Editor - Mandeep Kaur is working with IPP Group and holding editorial responsibilities for the IndiFoodBev and PSA Healthcare platforms. Earlier she handled editorial responsibilities of food, beverage, and agriculture publications at another publisher. A gold-medalist in M Tech (Food Technology), she has hands-on experience in operating different types of instruments related to physico-chemical testing of grains and flour. She has worked at Evalueserve in the Intellectual Property (IP) division for more than three years handling projects in the life sciences domain.

LEAVE A REPLY

Please enter your comment!
Please enter your name here