India’s coffee king V G Siddhartha’s journey from silver spoon to a gilded cage

• V G Siddhartha made as much as ₹2,858 crore by offloading his stake in Mindtree.
• His venture Way2Wealth has been piling up debt, while clocking in losses.
• ‘Coffee King’ was his success at convincing the government to ease its strict policies and duties,
• His plan of building coffee houses which also doubled as Internet cafes was a hit with Bangaloreans.

Just a few months back, V G Siddhartha made as much as ₹2,858 crore by offloading his stake in Mindtree. That could have felt like a windfall for anyone else. Not for Siddhartha who had financial and other troubles piling up.


At the time he went missing on Monday (July 30), a letter surfaced where he allegedly took the blame for bad business decisions but also accused lenders and tax officials of putting undue pressure on him.


Ever since, Income Tax Department raided his premises in 2017, he had been on a downhill. He is known to owe as much as ₹300 crore to IT authorities. This drove him to sell his stake in the IT company where he was invested since 1999.


The Silver Spoon


The stress of failure was too much for Siddhartha who has known success and only success even when he took risky bets.


Siddhartha had a charmed birth as he was born into a family which owned coffee plantations, and been in the business for 135 years. The heir apparent was not content running his family business, and his adventurous spirit was stoked by his own father who gave him ₹5 lakhs right after he completed his Masters in Economics from the Mangalore University.


He went on to learn the nitty gritty of stock markets by working with JM Financial before he started his own stock broking and investment banking firm, Sivan Securities. Yet, his legacy called him back and he started exporting coffee.


Legend of the Coffee King


What earned him his name ‘Coffee King’ was his success at convincing the government to ease its strict policies and duties, which made life tough for Indian planters. With the inflated taxes gone, the golden period of coffee traders started.


Yet again, Siddhartha refused to sit back and enjoy his cuppa. He wanted more. Against good counsel backed by research which said that branded coffee will not find success, he ventured yet again. At a time when coffee was made out of filters, he set up 20 stores in Bangalore which sold only coffee powder. As it was foretold, it saw limited success.


Hot, steaming coffee with a side of Internet


Like every visionary, he saw that having coffee is not just about the product. It was about providing an experience. As the café culture picked up internationally, he went ahead and set up cafes and added a topping---Internet. His plan of building coffee houses which also doubled as Internet cafes took care of both the basic necessities of Bangaloreans.


And, the first such store came into being in the most fashionable area of the city, Brigade Road. As it the city itself turned into an IT hub from a pensioner’s paradise, he minted millions--one cup at a time.


The golden cage


In good times, his networth was just over a $1 billion. As of now, Cafe Coffee Day is one of the biggest coffee chains in the world with over 1,772 outlets India and others like Egypt, Malaysia, Czech Republic and Nepal.


The investment banker’s own venture Sivan Securities, re-named as Way2Wealth has been piling up debt, while clocking in losses. It is known to have a debt of ₹168 crore as on March 2018.


He was also stressed by the hostile takeover of Mindtree buyout. As the promoters struggled to stay in control, infrastructure major L&T had been buying out investors, and eventually succeeded. In his letter, Siddhartha also said that the IT department had tried to block the sale of his shares, in spite of filing revised returns.


Siddhartha’s spiral was fast. The debt on Coffee Day Enterprises ballooned 1.5 times in the last three years and the pressure on him was intense. Even as Indian policymakers celebrate new bankruptcy laws -- which promise to make liquidation of businesses easier-- the disappearance of India’s most-famous coffee baron is a sign that business failures can quickly turn fatal.

SEE ALSO

Full text of the letter written by Cafe Coffee Day founder VG Siddhartha before he went missing


Cafe Coffee Day shares have lost ₹800 crore in value after founder VG Siddhartha goes missing