From growing coffee on a farm to taking the coffee culture to the cafes in India--VG Siddhartha, the late co-founder of Cafe Coffee Day, was heralded for being a good leader, a caring boss, and a coffee aficionado.
Born into a family known for planting coffee for more than a century and a half, VG Siddhartha completed his masters’ degree from Mangalore University, Karnataka. He went on to build a leading coffee empire in India with about 2,100 stores across the nation.
Siddhartha was regarded as a true son of the soil as he provided employment opportunities directly to the people in his hometown--Chikkamangaluru.
He was known to be a private individual who tried to stay away from the cameras. Even though he was the son-in-law of a political figure, the former chief minister of Karnataka, SM Krishna, Siddhartha stayed away from interviews.
Journey to the top
Back in the mid and late 80s, when coffee used to be a regulated commodity, Siddhartha invested in the Chikkamagaluru coffee plantations via the stock market. By 1991, he had found the seed capital for his coffee business. In 1993, with help from his father Gangaiah Hegde, Siddhartha started the Amalgamated Bean Company Trading and by 1995, it had become the country’s largest coffee exporter.
The start of Café Coffee Day was on Brigade Road in Bengaluru as a cyber cafe in 1996.
A visionary in his own right, Siddhartha had a global outlook towards creating a strong coffee-brand.
“I could have stayed in the family business but I did not want to retire at 21,” Siddhartha said.
He believed that an Indian coffee-brand could also become the coveted place for its ambiance, quality consumer product, and for the way being in a cafe made people feel. Siddhartha viewed Indian brands as equal if not better than international ones like Starbucks and Costa Coffee.
“If any big foreign brand comes to India, if you are not paranoid, that means either you are wrong or you are going to fail,” Siddhartha said.
It was not only the coffee cafe business that Siddhartha had a penchant for, but he had diverse business interests and as was evident in the varied types of businesses he invested in. For example, in 1999, Siddhartha bought about 6.6 percent stake in Mindtree for Rs. 44 crore. By 2003 the CCD at Lavelle Road had become India’s first wifi hotspot while in 2011 Siddhartha had purchased about 1.85 million hectares of Amazon forestland in South America on lease to begin a furniture business.
The road downhill
While things were looking hunky-dory from the outside, Siddhartha was slowly reeling under the pressures of massive amounts of debt.
By 2017, the Income Tax department had already raided about 20 of his properties in Bengaluru, Chikkamagaluru, Mumbai, and Chennai.
The raids were the start of the financial stress that Siddhartha referred to in his letter. Most recently, CCD had been in talks with Coca-Cola, the soft drinks giant, to expand into the carbonated drinks business. Siddhartha had sold a 20.32 percent stake and two affiliate organizations ( i.e. Coffee Day Enterprises and Coffee Day Trading) in software services company Mindtree to L&T in March for Rs. 3,200 crores.
The liquidity crunch fueled by the rise of short-term debts proved to be the final straw that broke Siddhartha’s resolve.
From Rs. 4,004 crore debt in FY18, CCD’s total debt ballooned up to Rs. 6,547 crore in FY19. Even though the company as a whole raised large amounts of debt on a corporate level, Siddhartha even raised personal ones against his own shares in the company. By June 2019, about 76 percent of his shares were pledged.
In his last letter, he assumed all responsibility for the failures of the business. He wrote, “I sincerely request each of you to be strong and to continue running these businesses with a new management…...My intention was never to cheat or mislead anybody. I have failed as an entrepreneur. This is my sincere submission. I hope someday you will understand, forgive and pardon me.”
The future of VG Siddhartha’s legacy
Siddhartha’s sudden death has left a void that needs to be filled. Questions about who will succeed him and assume the role of steering the company in the right direction, continue to be raised.
The succession plan for CCD’s management is still not in place and the board met on Tuesday to determine who will take charge. The meetings are expected to continue well into this week. The board’s independent directors include SV Ranganath, MD Mallya, and Albert Hieronimus.
In light of this incident, it is essential to focus on the bitter truth that is staring at us all. The C-Suite is not immune to stress. In this century of rising competition in the business world, entrepreneurs and CEOs are fighting a battle in the boardrooms as well as within themselves.
Lonely-at the top syndrome
Many a time, leaders are unable to share their concerns with their subordinates, team members and others in the workplace. For many entrepreneurs, it is difficult to separate their personal and professional lives and thus stressors in each affect their health.
Building a business empire and being responsible for the livelihoods of thousands of employees can take a toll on the leaders and often result in a burnout. To add to that, when faced with financial tensions that one feels that she or he cannot talk to anyone about, just pushes the person towards the edge.
Talking to trusted friends, colleagues and mentors can go a long way in ensuring that leaders also have a healthy support system.
Financial stress is a different monster altogether. Unfortunately, many a time, people refrain from discussing their financial matters with anyone--some even keep these details so close their hearts that even their family is unaware of what is really going on in their minds.
This incident is a wake-up call for companies the world over to prioritize the overall wellbeing of not only their employees but also their leaders. The mental and physical wellbeing of the people you work with and the people you work for is the most crucial aspect of leading a wholesome life.
Life is unpredictable. Be it the financial stressors, changes in the economy and the market or the transient nature of life--having a succession plan in place can ease the feeling of loss and grief within the company.
Moreover, the uncertainty that is felt by the employees not only on the emotional level but also on the business side, can be assuaged if there is something to look forward to, a leader or a team that can walk with them through the process of change can go a long way in building a cohesive workforce. Moreover, it bodes well for a sustainable business model in this day and age of uncertainty.
While there will be speculations about what went wrong and what could have been done better, the fact remains that Siddhartha will always be remembered as a humble, large-hearted and passionate human being who was loved by not only the people who worked for him but also the ones who came in contact with him for different reasons.
The love and respect is evident from the fact that farmers and workers flocked to the city the moment they heard that their leader had gone missing.
Finally, hoping that such inspirational lives do not see such tragic ends.
Image credit: Top Tamil News