Missing CCD founder VG Siddhartha disappearance raises more questions than answers

CCD founder VG Siddhartha, who has been missing since July 29, was in news recently for selling his stake to IT firm Mindtree to clear his Rs 3,000-crore debt.

The man credited with giving India its first home-grown café chain had been through some rough time with debt piling up.

Siddhartha was also in talks with Coca-Cola to sell his Café Coffee Day, popularly known as CCD, chain, media reports have said. An extensive search is on for the 60-year-old businessman who was last seen in Mangaluru.

Who is VG Siddhartha?

Before he took the coffee plunge, Siddhartha was an investment banker and trader. Born in Karnataka's Chikkamagaluru, he started his career as a management trainee trading in Indian stock market at JM Financial under the tutelage of Mahendra Kampani in 1983, after completing his masters’ degree from Mangalore University.

In 1992, he launched Amalgamated Bean Company Trading (now known as Coffee Day Global), an integrated coffee business that ranges from procuring, processing and roasting coffee beans to retailing coffee products.

After the success of the venture, Siddhartha in 1996 opened India’s first coffee café -- Café Coffee Day -- on Bengaluru’s Brigade Road, a novel idea for a country that had begun to open its economy. With 1,751 outlets in 250 cities, CCD is one of the largest café chains in India. It also has a presence in Vienna in Austria, Czech Republic, Malaysia, Nepal and Egypt.

Coffee Day Enterprises, which includes his coffee and wealth management business, registered a revenue of Rs 3,788 crore for FY19.

 Mindtree venture

With his coffee venture doing well, Siddhartha was roped in as an investor by Ashok Soota for Mindtree, which was started by 10 people, including Subroto Bagchi, Rostow Ravanan and KK Natarajan, in 1999.

According to reports, Siddhartha invested Rs 340 crore for a 20.4 percent stake in Mindtree.

 CCD losses

In 2015, Coffee Day Enterprises came out with an initial public offering (IPO) but by then, it had started making losses. In June of that year, Siddhartha said he would use the IPO proceeds to repay his debt of close to Rs 632 crore, including Rs 122 crore for the coffee business, reports said.

The balance was to be used for business expansion and general corporate purposes. The debt of Coffee Day, which listed on the exchange in November 2015, stood at Rs 2,672 crore as at the end of June 2015.

By 2018, the debt had mounted to Rs 3,323.8 crore.

It was to clear this debt that Siddhartha sold his stake in Mindtree to L&T and took home Rs 3,000 crore after staying invested in the IT firm for 20 years.

Recently the US-based beverage giant Coca-Cola was in talks with Siddhartha to buy his CCD chain to diversify its portfolio. Siddhartha was looking at a valuation of Rs 8,000 crore-Rs10,000 crore, according to an ET report.

Speculation over his disappearance

It is not clear why he went missing at a time when his business was seeing a turnaround. Some reports even claimed that he might have committed suicide.

Siddhartha made good money by selling stake in Mindtree, enough to repay debts. The Coca-Cola deal, if done, would put him in a comfortable position to expand his coffee venture.

His sudden disappearance and a letter to stakeholders, which surfaced after he went missing, raises questions about his business.

Driver Basavaraja Patil, who has been with the businessman for three years, said they were moving towards Mangaluru when Siddhartha got down from the car at around 6pm near Netravathi river bridge to answer a phone call.

But, when he did not return or answer phone calls, a worried Patil informed the family, which filed a missing person report at 12.30am on July 30.

Huge search operation is underway in Mangaluru. Karnataka chief minister BS Yediyurappa and senior Congress leader DK Shivakumar have visited SM Krishna, Siddhartha’s father-in-law.