V.G. Siddhartha, Café Coffee Day's fortunes and the story behind it all

V. G. Siddhartha: his cup brimmed with coffee, shares, hospitality ventures, real estate et al

Broken dreams: In a letter purportedly written by Siddhartha, he alleged pressure from a private equity entity.

Broken dreams: In a letter purportedly written by Siddhartha, he alleged pressure from a private equity entity.   | Photo Credit: Getty Images

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Siddhartha is regarded as a pioneer in ushering in cafe culture in India with his venture Cafe Coffee Day; today it has more than 1,700 outlets

Coffee baron V. G. Siddhartha, who hails from Chikmagaluru district of Karnataka, is one of the country’s largest coffee growers, traders and exporters of the commodity.

He owns about 20,000 acres of coffee plantations in Chikmagaluru and Hassan districts and grows over 35,000 tonnes of coffee a year. He is also regarded as a pioneer in the country’s coffee retailing. He forayed into cafe business with Cafe Coffee Day in 1996, pegging it as a hangout for youth, entrepreneurs and families. It currently has more than 1,700 outlets.

 

Cafe culture

“It is Cafe Coffee Day that brought in cafe culture in the country. Until then, coffee was considered a southern beverage,’’ said Harish Bijoor, a domain expert and CEO of Harish Bijoor Consults.

As a 20-something, Mr. Siddhartha joined J. M. Financial Limited in Mumbai as a management trainee specialising in portfolio management and securities trading in the Indian stock market in 1983.

Post that, he returned to Bengaluru and took over Sivan Securities, which was renamed in 2000 as Way2wealth Securities. His venture capital arm Global Technology Ventures (GTV) became a successful investment firm and he had investments in a series of start-ups and other businesses.

In March, Mr. Siddhartha sold 20.4% stake in mid-tier tech firm Mindtree to L&T, which eventually led to a hostile acquisition by the engineering giant. It was in 2000 that he made the investment in the start-up through Coffee Day Trading. Most recently, he was in the news again in connection with CCD’s talks with carbonated drink major Coca Cola for a possible sell out.

 

He rapidly expanded his businesses and diversified into logistics, furniture-making, hospitality and real estate, apart from his mainstay business of coffee bean trading and exporting and the newly-entered coffee retail business.

The company’s prospects were quite bullish until 2014 with plans to open over 2000 cafes to give a run to its arch rival Starbucks. However, things did not pan out as per expectations. Both debts and borrowings had increased. I-T sleuths also took action against him in respect of certain matters.

As per the company’s unaudited results for fiscal 2018-19, CCD had total borrowings of ₹6,547.38 crore as of March 2019, an increase of 64% over the previous year.

As per annual report, it had a gross debt of ₹5,049 crore during 2017-2018. The company is yet to release the audited revenue number for 2018-19.

It was Ashok Soota, an old Wipro loyalist, who roped in Mr. Siddhartha into Mindtree venture in 1999. To start with, Mr. Siddhartha invested ₹44 crore to buy a 6.6% stake in Mindtree and by 2012, he had invested ₹171 crore to buy 20.43% shares.

With 1,752 cafes across India as of March 2019, Café Coffee Day clocked a revenue of ₹1,777 crore and ₹1,814 crore in FY18 and 2019 respectively and is eyeing ₹2,250 crore by March 2020.

V.G. Siddhartha's and Café Coffee Day's journey through the years

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Printable version | Dec 8, 2019 10:02:55 AM | https://www.thehindu.com/business/Industry/his-cup-brimmed-with-coffee-shares-hospitality-ventures-real-estate-et-al/article28762951.ece

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