Coffee King’s tragedy

A lot can happen over coffee! This tagline of the Café Coffee Day chain was quoted by scores who paid homage to V.G. Siddhartha, CCD’s founder, on the social media on Wednesday as his last rites were conducted. The first outlet he opened at Bengaluru’s Brigade Road in 1996 offered free Internet access to customers, well before Starbucks set up outlets in the country. The CCD brand created a wealth of job opportunities for young men and women returning home with degrees from reputed universities abroad.

The CCD chain was not his sole business venture as  Siddhartha dabbled in IT, donned the role of a venture capital investor, launched a chain of top-end resorts for the well-heeled, and an international school.

Now why this entrepreneur chose a watery end may have no clear answer yet, especially as the new board of directors sets out to investigate Siddharatha’s elaborate suicide note.  As charges fly over “tax terrorism”, clearly this was one businessman who found the tight liquidity condition in the market a challenge when he ventured to refinance his outstanding debt of over `12,000 crores, which was spiralling because of the accruing interest. He tried to borrow at higher rates of interest to pay off existing creditors. He was in talks to sell a partial or full stake of the coffee business as well as IT parks to emerge debt-free. Finally, though, despite substantial assets, he could not withstand pressure from private equity investors and creditors.

The lesson for entrepreneurs, as tweeted by Anand Mahindra: “Entrepreneurs must not allow business failure to destroy their self-esteem as it will spell the death of entrepreneurship, the engine that drives the Indian economy.”