CCD (Cafe Coffee Day), a renowned F&B chain in India, has received a dreadful news today. The twenty-six years old F&B chain has ceased its operations for the current day to pay respect to its deceased Founder and Chairman, V. G. Siddhartha.
The demise of Siddhartha has taken place under mysterious circumstances as it is not a natural death. According to media reports, CCD’s founder had leapt into Nethravati River, Mangaluru and after 36 hours of the probe, his body was recovered from the banks of the river by a local fisherman.
The Backstory of V.G. Siddhartha’s Death
A few days back, Siddhartha has shared a written note with his employees stating that he has failed to create ‘a right profitable business model’. The founder wrote down the letter on 27 July 2019 wherein he addressed various issues that led him to this then-unknown choice, as reported by the daily news, Hindustan Times.
Furthermore, he mentioned that his then-unknown choice will resolve grappling financial circumstances as “As seen our assets outweigh our liabilities and can help repay everybody.” Within the same letter, Siddhartha accused one of the private equities of his ordeal and also, revealed harassment he faced from the hands of Former Income Tax DG.
Over the years, CCD’s financial backdrop was stable; however, in FY 2018-19, the company’s sales turnover has leapt down exponentially. As per Profit & Loss Account of CCD, sales turnover of the last five years is INR 122.32 million (2019), INR 140.31million (2018), INR 96.46 million (2017), INR 48.72 million (2016) and INR 28.69 million (2015).
So, the staggering financial background of CCD is another reason which would have caused tension for Siddhartha.
Companies Meeting a Similar Fate
Similar to CCD, there are various entrepreneurial journeys which have stalled in recent times. The second-largest Indian air carrier, Jet Airways met its doom a few months back when the company failed to secure emergency funds from its investors.
Jet Airways had a liability of almost $1.2 billion, including deferred employees’ remuneration, premiums of bank loans and fuel charges, etc. As a result, the carrier had to cease its operations on April 17 and later, a consortium was formed, which was led by SBI.
The consortium had taken several moves to uphold Jet Airways, including discarding Naresh Goyal from Jet Airways’ board and ascertaining new buyers for the carrier. However, the consortium could not find the right fit for Jet Airways’ ownership and that’s why the carrier never started its operations anew.
Another company that closely relates to CCD is homegrown e-commerce company, Flipkart. Sachin Bansal and Binny Bansal-founded, Flipkart is one of the renowned e-tailers in the country. In 2018, the e-tailer gained traction of the US-based retail company, Walmart and consequently, received a massive investment from it.
Following the investment, Sachin Bansal exited the e-commerce company, Flipkart owing to the shrinking of his stakeholdings and ownership in the firm. He decided to sell his stakes and move out of the board. In a short period, Binny Bansal walked on the same course and abruptly resigned from the CEO role at Flipkart. Allegations of ‘personal misconduct’ are anticipated to be a core reason behind his resignation.
Like this, there are several incidents in the Indian ecosystem where risk-taker entrepreneurs suffer from the hands of the Indian government, affluent investors and private equities, etc. For incentivizing entrepreneurship in the country, such malpractices should be stopped.