Inspiring story of Cafe Coffee Day.

On the evening of July 29, 2019, a car stopped near a bridge by the Netravati River. A man got out of the car and asked the driver to wait at the other end while he went for a walk. However, he didn’t return after an hour, which made the driver worried. The driver informed the man’s family and the police. Sadly, on July 31, 2019, at 6:30 AM, local fishermen found his body on Hoige Bazaar Beach. The entire country was shocked to hear about the death of V.G. Siddhartha, the founder of Café Coffee Day.

What was the reason that led VG Siddhartha to end his own life?

Café Coffee Day, widely recognized as one of the most renowned and successful coffee cafes, had accumulated significant debts unknown to many until its owner, VG Siddhartha, tragically took his own life.

In 1996, Siddhartha established Café Coffee Day in Bangalore, Karnataka. The first café was a small outlet, but it quickly gained popularity among the youth and the urban middle class. Siddhartha’s vision was to provide a relaxed and comfortable space where people could enjoy a cup of coffee and socialise. Under V.G. Siddhartha’s leadership, Café Coffee Day experienced rapid expansion, opening numerous outlets across India. By 2011, CCD had crossed the milestone of 1000 stores. Siddhartha focused on diversifying the offerings, introducing a wide range of food and beverages beyond coffee. The chain became known for its affordable pricing, making it accessible to a wide customer base and solidifying its position in the market.

However, V.G. Siddhartha faced significant challenges and debt-related issues. The circumstances surrounding his debt were indeed shocking and surprising to many. Siddhartha acquired loans for various reasons, including the expansion of Café Coffee Day, diversification into different sectors, personal investments, and challenging business conditions.

After selling his stake in Mindtree, Siddhartha’s debt reached over 7,000 crores as per 31 march 2019. Additionally, Coffee Day Enterprises Ltd, the parent company of Café Coffee Day, experienced a net loss of ₹67.71 crore in the fiscal year ended March 31, 2018.

Siddhartha was reportedly in talks to sell Coffee Day Enterprises, where he held a 32.75% stake, to Coca-Cola for around $1.45 billion. However, this deal did not materialise.

The pressure from lenders increased, and Siddhartha felt that his debt had become unmanageable to some extent in 2019. The IL&FS crisis, which refers to the crisis faced by Infrastructure Leasing & Financial Services Limited, and pressure from other lenders contributed to his difficulties.

Furthermore, Café Coffee Day had several encounters with the income tax department. In 2017, IT officers raided the company and discovered approximately 300 crores of undisclosed money. Siddhartha mentioned three major issues in his suicide note that led him to succumb to the situation:

1. Pressure from his private equity partners over a buyback of shares.
2. Pressure and stress from his lenders.
3. Harassment faced from the income tax department.

V.G. Siddhartha was a kind, humble, and introverted person. He might have carried a great sadness within himself. He kept his debts a secret from his family and took on the weight of his problems alone. As time passed, the mounting pressure likely became unbearable for him, ultimately resulting in his tragic death.

After the sad passing of VG Siddhartha, Everybody thought that Cafe Coffee Day would face financial difficulties.

Fortunately, there was one person in the family who hoped to take re-birth from ashes!

That person not only revived the company but also reduced the debt burden on the company. The main thing was to save the lives of the employees who depended on company, without sending anyone at home.

She is a daughter of former Chief Minister of Karnataka, former Foreign Minister of India and former Governor of Maharashtra, Mr. M. Krishna and VG Siddharth’s wife, Malvika Hegde!

In her first letter to the company’s 25,000 employees, Malavika made a heartfelt promise to pay off the company’s debts by selling investments and assets. She assured them that she would do everything she could to make the company financially stable again, while also keeping their jobs secure. In 2020, she became the CEO, bringing a renewed sense of determination and purpose to the company.

Under Malavika’s thoughtful and smart leadership, Cafe Coffee Day made significant progress. She implemented strategies to reduce the company’s debts and improve its financial situation. By March 2020, the company had successfully reduced its debts to 3100 crores, and by 2021, it further decreased to 1731 crores. As of September 2022, the total debt stands at 465 crores. Additionally, CCD reported a net profit of 64 crores globally, showing the positive impact of Malavika’s efforts.

Malavika’s approach to repaying the debts involved having positive discussions with financial institutions. She passionately explained the challenges of selling all the company’s assets and requested more time to fully repay the debts. Through her convincing and determined approach, she gained the trust and cooperation of the lenders, allowing the company to work towards a sustainable debt repayment plan.

Despite the unprecedented challenges caused by the COVID-19 pandemic, Cafe Coffee Day persevered under Malavika’s leadership. The company adapted to the new circumstances by implementing strict safety measures in all its cafes, ensuring the well-being of customers and employees. By prioritising the health and safety of everyone involved, CCD regained the trust and loyalty of its customers.

Malavika also focused on strengthening the company’s financial position by forming strategic partnerships and attracting new investors. She used the well-known and respected Cafe Coffee Day brand to showcase its value and potential for growth. Thanks to her efforts, the company successfully secured additional funding, which further strengthened its operations and paved the way for future expansion.

To increase profitability, Malavika made smart decisions such as selling underperforming cafes and discontinuing vending machines that were not making a profit. She also found more cost-effective suppliers for machinery and coffee beans, sourcing from China and Singapore. These actions not only reduced expenses but also ensured that CCD could offer high-quality and competitive products.

Malavika Hegde’s dedicated leadership and strategic actions played a vital role in bringing Cafe Coffee Day back to life. Her unwavering commitment to honouring her husband’s vision, protecting jobs, and caring for the company and its employees deserves great admiration. Through her determination and resilience, she rejuvenated the company and set it on a path towards sustainable growth and success.