CAFÉ COFFEE DAY

WHO WAS V.G. SIDDHARTHA?

• V G SIDDHARTHA, THE SON-IN-LAW OF FORMER KARNATAKA CHIEF MINISTER S
M KRISHNA, WAS BORN IN KARNATAKA’S CHIKKAMAGALURU DISTRICT IN A
FAMILY THAT HAD BEEN IN THE BUSINESS OF COFFEE PLANTATION FOR AROUND
140 YEARS.

• SIDDHARTHA IS CREDITED WITH CREATING INDIA'S LARGEST COFFEE EMPIRE —

CAFÉ COFFEE DAY.

• AT 24 IN 1983, HE LEFT THE COMFORT OF HIS HOME AND TRAVELLED TO MUMBAI

IN PURSUIT OF HIS DREAMS. THAT YEAR, HE JOINED JM FINANCIAL LIMITED IN
MUMBAI AS A MANAGEMENT INTERN UNDER VICE-CHAIRMAN MAHENDRA
KAMPANI.
 CONTINUED..

• AFTER WORKING FOR TWO YEARS IN JM FINANCIAL, HE RETURNED TO

BANGALORE. WITH CAPITAL GIVEN BY HIS FATHER, SIDDHARTHA BOUGHT
STOCKS WORTH ₹30,000 AND STARTED THE COMPANY SIVAN SECURITIES. IN
1999, IT WAS RENAMED WAY2WEALTH SECURITIES LTD. ITS VENTURE CAPITAL
DIVISION CAME TO BE KNOWN AS GLOBAL TECHNOLOGY VENTURES (GTV).
THE PROBLEMS OF COFFEE MARKET
• V.G. SIDDHARTHA IDENTIFIED A CRUCIAL PROBLEM THAT WAS AFFECTING COFFEE GROWERS IN
INDIA. THE COFFEE BOARD (A GOVT AGENCY) HAD A MONOPOLY ON THE MARKETING OF COFFEE
GLOBALLY. COFFEE PLANTERS WERE UNABLE TO SELL THEIR PRODUCE DIRECTLY TO FOREIGN
MARKETS. IN 1985, HE NOTICED THAT INTERNATIONAL COFFEE PRICES STOOD AT $1.2 PER
POUND, WHEREAS INDIAN COFFEE GROWERS WERE ONLY GETTING 35 CENTS A POUND.
SIDDHARTHA AND A FEW OF HIS COLLEAGUES APPROACHED THE FINANCE MINISTER WITH THESE
STATISTICS.

• WITHIN SIX MONTHS, THE GOVERNMENT RESOLVED THE ISSUE. PRIVATE ENTITIES WERE NOW
ALLOWED TO SUPPLY COFFEE DIRECTLY TO INTERNATIONAL MARKETS.
OPPORTUNITY IDENTIFICATION
• IN 1991 WHEN GOVERNMENT INTRODUCED LPG POLICY V.G. SIDDHARTHA REALISED THE POTENTIAL OF
SELLING THE COFFEE IN THE INTERNATIONAL MARKET AND THEN IN 1993 HE ENTERED THE COFFEE
BUSINESS AND GOT SUCCESS BY 1995. BY 1995 HE BECAME LARGEST EXPORTER OF UNROASTED
COFFEE.BUT THEN HE REALISED THAT THE COFFEE MARKET WAS VERY VOLATILE AND THERE WAS NO PRICE
STABILITY.

• THIS PERPLEXITY STRUCK HIM. THEN HE THOUGHT OF SOLUTION WHICH WAS TO CREATE A BRAND OF HIS
OWN IN ORDER TO MAXIMIZE THE PROFITS. THERE WERE THREE SOLUTIONS TO THIS PROBLEM :

• STARTING A CHAIN OF CAFÉ FOR SELLING COFFEE(WHICH HE DID LATER ON)

• SELLING HIS OWN COFFEE POWDER
• SELLING COFFEE VENDING MACHINE
ENTRY INTO THE COFFEE BUSINESS:

• IN 1993, V.G. SIDDHARTHA ESTABLISHED HIS COFFEE TRADING COMPANY— AMALGAMATED BEAN
COMPANY (ABC). IT IS AN INTEGRATED COFFEE BUSINESS INVOLVED IN PROCURING, PROCESSING, AND
ROASTING COFFEE BEANS. THEY ALSO STARTED EXPORTING AND RETAILING COFFEE BEANS AND
PRODUCTS. BETWEEN 1993-1995, ABC BECAME THE LARGEST EXPORTER OF COFFEE IN INDIA. AFTER
ANALYSING THE TRENDS OF COFFEE HUBS IN HIS INTERNATIONAL TRIPS, SIDDHARTHA DEVELOPED AN IDEA
OF LINKING THE EXPERIENCE OF DRINKING COFFEE WITH TECHNOLOGY.

• WITH AN INITIAL INVESTMENT OF RS 1.5 CRORE, HE ESTABLISHED THE FIRST CAFE COFFEE DAY (CCD) IN
BRIGADE ROAD, BANGALORE, IN 1996. IT SOLD COFFEE FOR RS 25 A CUP AND ALSO OFFERED INTERNET
SERVICES. THE IDEA CLICKED INSTANTANEOUSLY, AND THE CAFE BEGAN TO ATTRACT THE CITY’S YOUTH
(MAINLY IT PROFESSIONALS). CCD STARTED TO SELL ESPRESSOS AND LATTES IN A COUNTRY WHERE PEOPLE
PREDOMINANTLY DRANK FILTER COFFEE. IT BECAME A SYMBOL OF INDIA'S URBAN CULTURE.
START OF THE CAFÉ
• V.G. SIDDHARTHA WAS VERY UNSURE AS TO HE SHOULD ENTER THE CAFÉ BUSINESS AND HAD ALREADY BEEN
ADVISED OTHERWISE BY CLOSE FRIENDS AND FAMILY.

• AT THAT TIME HE HAD AN INTERNATIONAL TRIP TO SINGAPORE WHERE HE SAW THE CAFÉ CULTURE . HE SAW
EVERYONE COMING IN THE CAFÉ WITH THEIR LAPTOPS AND DRINKING COFFEE AND WORKING ON THEIR
LAPTOPS WHILE DOING SO.

• HE TRIED TO REPLICATE THAT IN INDIA . BY THE YEAR 1996 HE HAD ALREADY EARNED A LOT AND DECIDED TO
TAKE A RISK BY INVESTING RS. 1.5 CRORE AND STARTING A CAFÉ . THE CONCEPT OF THE CAFÉ WAS TO SELL
COFFEE AT RS 25/- WHILE THE FILTER COFFEE WAS BEING SOLD AT RS. 10/- ROADSIDE. BUT HE INTRODUCED
ANOTHER CONCEPT AND STARTED TO GIVE WIFI ALONG WITH IT AND EVEN THOUGH THERE WERE NOT MANY IT
PROFESSIONALS THE BUSINESS FLOURISHED VERY WELL BECAUSE OF THIS CONCEPT .
VISION AND MISSION
• COFFEE DAY GROUP’S VISION STATEMENT - SHOWING THE WORLD WHERE COFFEE CAN
TAKE US

• MISSION STATEMENT - TO FIND AND EXTRACT THE BOUNDLESS POTENTIAL IN ALL

THAT WE
DO—JUST AS WE HAVE FOR EVERY CUP OF COFFEE.
 (CCD)-CAFÉ COFFEE DAY
• Café Coffee Day, a part of Coffee Day Global Limited, is India’s favorite hangout
for coffee and conversations. Popularly known as CCD, it strives to provide the
best experience to its guests.
• FIRST CAFÉ- The first cafe was opened in 1996 at Brigade Road in Bangalore – the youth
and the young at heart immediately took to the cafe, and it continues to be one of the
most happening places in the city. To the youth, CCD is a “hangout” spot where they
meet people, make conversations, and have a whole lot of fun over steaming cups of
great coffee. It's been an exciting journey since then to becoming the largest organized
retail cafe chain in the country.
• A SMART, SIMPLE SPACE THAT THEY COULD CALL THEIR OWN FOR A WHILE… SIT DOWN, TALK AND
LISTEN TO CONVERSATIONS HOLD SHORT MEETINGS OR EVEN HAVE A LOT OF FUN… ALL OVER
STEAMING CUPS OF COFFEE

https://www.youtube.com/watch?v=G6BF4KLl2hQ&t=63s
MISSION STATEMENT AND TAGLINE

• MISSION- TO BE THE BEST CAFE CHAIN BY OFFERING A WORLD

CLASS COFFEE EXPERIENCE AT AFFORDABLE PRICES.

• TAGLINE-“A LOT CAN HAPPEN OVER COFFEE”

THE RISE
• CAFE COFFEE DAY RAPIDLY EXPANDED TO OTHER CITIES IN INDIA. OVER THE NEXT TWO DECADES, CCD
BECAME THE LARGEST COFFEE RETAILER IN INDIA, WITH MORE THAN 1,700 OUTLETS. IT ALSO ALIGNED ITS
PRICING MODEL TO MATCH THE SPENDING CAPACITY OF INDIAN CONSUMERS. CCD PRIMARILY FOCUSED ON
ATTRACTING MORE FOOTFALL TO ITS STORES, RATHER THAN FIXING HIGHER PRICES FOR THE COFFEE-BASED
BEVERAGES. YOU CAN ALSO FIND THEIR COFFEE MACHINES IN MOST COLLEGE CAFETERIAS, HOSPITALS, HOTELS,
AND CORPORATE OFFICES.

• AS OF 2011, IT HAD A NETWORK OF 1000 + CAFE OUTLETS SPREAD ACROSS MULTIPLE TIER-1 AND TIER-2 CITIES,
WHICH CURRENTLY HAS REDUCED TO 550 OUTLETS OPERATING IN 165 CITIES UNDER THE ESTABLISHED AND
RECOGNIZED BRAND NAME “CAFE COFFEE DAY” (POPULARLY REFERRED TO AS “CCD”).

• HTTPS://DAZEINFO.COM/2019/08/09/COFFEE-DAY-ENTERPRISES-REVENUE-FROM-EXTERNAL-CUSTOMERS-BY-C
OUNTRY-GRAPHFARM/#:~:TEXT=IN%20FISCAL%202011%2C%20THE%20CDEL,YOY%20GROWTH%20IN%20FY’18
 PRICE COMPARISON BETWEEN CCD
AND STARBUCKS
CAFÉ COFFEE DAY STARBUCKS
START OF COFFEE DAY FRESH AND
GROUND AND COFFEE VENDING MACHINE

• V.G. SIDDHARTHA OPENED AROUND 450 OUTLETS OF COFFEE DAY FRESH AND GROUND IN
ORDER TO CREATE A BRAND AND STARTED SELLING COFFEE POWDER THROUGH THESE STORES
IN ORDER TO EARN A CONSTANT PROFIT .

• NOT ONLY THIS COFFEE DAY GROUP ALSO STARTED SELLING THE VENDING MACHINES AND TO
THIS DAY THE VENDING MACHINE BUSINESS IS RUNNING .

• MOST OF THE CORPORATES HAD THE COFFEE VENDING MACHINES FROM THE CAFÉ COFFEE DAY
WHY DID CCD GAIN POPULARITY
• AS THE COFFEE CAFE CULTURE IN INDIA GREW, THE NEED FOR A MORE
RELAXED AND FUN ‘HANGOUT’ FOR THE ASPIRATIONAL URBAN YOUTH
BEGAN TO EMERGE IN THE COUNTRY.

• EARLY MOVER ADVANTAGE

• LOCATION OF OUTLETS
• PRICE POINT
• VERTICALLY INTEGRATED BUSINESS MODEL OF CCD
CONTINUED
• BY THE YEAR 2000 CAFÉ COFFEE DAY HAD OPENED 22 OUTLETS IN THE SOUTHERN
INDIA.

• BY 2004 CCD HAD 200 OUTLETS ALL OVER INDIA

• AND FAST FORWARD TO 2014 THEY HAD 1488 CAFÉ ALL OVER INDIA AND 28,777
COFFEE VENDING MACHINES HAD ALREADY BEEN INSTALLED IN MANY OF THE
CORPOTATES.
• THIS WAS THE RISING PHASE OF THE CAFÉ COFFEE DAY.
THE FALL
• DEATH OF THE FOUNDER V.G. SIDDHARTHA
• "MY INTENTION WAS NEVER TO CHEAT OR MISLEAD ANYBODY, AND I HAVE FAILED AS AN ENTREPRENEUR."

• THE LETTER REPORTEDLY TYPED AND SIGNED BY V.G. SIDDHARTHA ALLEGES HARASSMENT BY B.R. BALAKRISHNAN, THE PREVIOUS
DIRECTOR GENERAL-INVESTIGATIONS, INCOME TAX.

• THERE WERE BUSINESSMEN WHO HAD FAR GREATER DEBT PROBLEMS, AND SIDDHARTHA'S BUSINESSES AT LEAST SEEMED TO HAVE
ENOUGH ASSETS TO COVER THE DEBT BY A GOOD MARGIN

• AS DAYS GO BY THOUGH, MORE EVIDENCE POINTS TO SIDDHARTHA HAVING TAKEN ON DEBT IN HIS PRIVATE CAPACITY TO BUY LAND AND
INVEST IN LONG GESTATION PROJECTS, AND ANGRY LENDERS HOUNDING HIM FOR QUICK RETURNS. THERE IS ALSO A POLITICAL ANGLE
TO THE TALE. BUT DESPITE HIS FATHER-IN-LAW CHANGING SIDES, SIDDHARTHA HAD CLOSE FRIENDSHIPS WITH MANY CONGRESS
POLITICIANS FROM KARNATAKA, INCLUDING STRONGMAN D.K. SHIVAKUMAR. CLOSE FRIENDS AND PROMINENT BUSINESS LEADERS
FROM BENGALURU SPECULATED THAT HE MIGHT ALSO HAVE GOT CAUGHT IN THE CROSSFIRE BETWEEN THE TWO PARTIES.
 SHAREHOLDING
PATTERN

• STOCK MARKETS HAD TAUGHT SIDDHARTHA THAT PATIENCE WAS AN

ESSENTIAL VIRTUE FOR AN INVESTOR. BUT TO EXPECT PE FUNDS TO
STAY INVESTED FOR A LONG TERM WAS A MISCALCULATION ON HIS
PART.

• THINGS HAD COME TO SUCH A PASS THAT THE TOTAL DEBT BECAME
OVERWHELMING. THE OVERALL LIQUIDITY CRISIS IN THE BANKING
SYSTEM ONLY ADDED TO SIDDHARTHA'S TROUBLES - HIS COST OF
FUNDS INCREASED.
SILO STRUCTURE OF THE COMPANY
• HE STRUCTURED CO. TO WORK IN STRICT SILOS,WHICH MEANT EACH DEPARTMENT WAS VIRTUALLY
UNAWARE WHAT THE OTHER WAS DOING AND WAS FATAL TO THE VERY IDEA OF INTERNAL CONTROL AND
INTERNAL CHECKS.

• MORE IMPORTANTLY THE TOWERING PERSONALITY OF THE FOUNDER DWARFED EVERY OTHER PERSON ON
THE BOARD WHO WERE CHARMED BY HIM TO BELIEVE RATHER THAN QUESTION THE BUSINESS MODEL

• HE WAS THE SOLE IN COMMAND OF FINANCING WHICH EFFECTIVELY ENSURED HE ALONE KNEW THE REAL
FINANCIAL PICTURE OF THE COMPANY AND ITS SUBSIDIARIES .
 DEBT TRAP
• THE COMPANY'S NET DEBT, AS ON MARCH 31, 2017, STOOD AT RS 2,972 CRORE (INCLUDING SHORT-TERM
BORROWINGS AMOUNTING TO RS 541 CRORE). DATA (ACE EQUITY), HOWEVER, REVEALS THAT THE
COMPANY'S FREE CASH FLOW WAS A NEGATIVE RS 533 CRORE AT THE END OF 2015/16. IN FACT, BY THE
END OF DECEMBER 2016, THE PROMOTER GROUP HAD ALREADY PLEDGED MORE THAN HALF (54 PER
CENT) OF THEIR HOLDINGS TO RAISE MONEY LARGELY FOR THE CONSTRUCTION BUSINESS (TANGLIN)
AND THE HOSPITALITY BUSINESS. MANY PEOPLE, INCLUDING NANDAN NILEKANI, WARNED SIDDHARTHA
AGAINST OVER-LEVERAGING, SAYS A BUSINESS ASSOCIATE CLOSE TO HIM. "HE WAS VERY OPTIMISTIC
ABOUT THE MARKET. WHAT COULD ONE DO?"

• THE TOTAL CONSOLIDATED DEBT OF ENTERPRISE WAS ESTIMATED AT RS 6,547 OF WHICH RS 1,028 CRORE
DEBT SEEMS TO BE ON PERSONAL GUARANTEE AND THE REMAINING DEBT RS 3,537 ON SIDDHARTHA’S
PROMOTER GROUP’S FOUR PRIVATE HOLDING FIRMS (A CMIE ESTIMATE).

• CCD FACED SEVERE CASH FLOW CONDITIONS FOR MEETING ITS WORKING CAPITAL REQUIREMENT OF
THE BUSINESS. ESPECIALLY ON PAYMENT OF INTEREST ON DEBTS THAT WAS BORROWED FROM THE
BANKERS AND FINANCIAL INSTITUTIONS. HE WAS RUNNING OUT OF COLLATERAL.
PROBLEM WITH THE INCOME TAX DEPARTMENT

• IN THE YEAR 2017, IT DEPARTMENT FIRST RAIDED CCD’S HEADQUARTER, MAIN BRANCH OFFICES AND
SOME PREMISES IN HIS ESTATES, THEY FOUND RS 650 CRORE SECRET INCOMES FROM THE DOCUMENTS
SEIZED WHILE CONCLUDING THE SEARCH AND SEIZE OPERATIONS. IT DEPARTMENT ALSO SEIZED THE
SHARES OF MINDTREE LATER THEY WERE RELEASED. HE WAS EXTREMELY HUMILIATED WITH THE
TREATMENT OF TAX OFFICIALS, WHICH WAS MENTIONED IN HIS SUICIDE LETTER.THE ABOVE SAID MIGHT
BE SOME REASONS FOR HIS SUICIDE, YET THERE WERE NO PROPER EVIDENCE REGARDING THESE ISSUES.
HIS LIFE, JOURNEY, GROWTH, ACHIEVEMENTS, LEGACY, UPS AND DOWNS EVERYTHING WAS TASTED BY
HIM, A WEAK DECISION MADE TO WIND-UP HIS LIKE IN INDIAN BUSINESS.
TIMELINE
THE REVIVAL
WHO IS MALVIKA HEDGE?
• SHE IS THE WIFE OF CCD FOUNDER LATE V.G. SIDDHARTHA AND DAUGHTER OF FORMER CM OF KARNATAKA
SM KRISHNA.

• THE VOID LEFT BY SIDDHARTHA'S DEMISE PRESENTED AN UPHILL STRUGGLE, BUT

MALAVIKA, EQUIPPED WITH DETERMINATION, RESILIENCE, AND A COMMITMENT TO UPHOLD
HER HUSBAND'S LEGACY, TOOK THE REINS OF THE BELEAGUERED COMPANY. STEPPING INTO
HER HUSBAND'S SHOES IN DECEMBER 2020, SHE ASSUMED THE ROLE OF CEO OF CCD-PARENT
COFFEE DAY ENTERPRISES LIMITED (CDEL) WITH A SINGLE-MINDED FOCUS: SAVE THE BRAND
SHE LOVED.
DEALING WITH THE DEBT
• DEALING WITH THE ENORMOUS DEBT WAS HER FIRST DAUNTING TASK. HOWEVER, HER APPROACH, MARKED BY WISDOM AND
COURAGE, ENSURED THAT HER STRATEGY WENT BEYOND MERE SURVIVAL.
• ONE OF HER SHREWD BUSINESS STRATEGIES WAS TO AVOID RAISING PRICES OF THE BRAND'S SIGNATURE PRODUCTS - AN
UNCONVENTIONAL MOVE WHEN DROWNING IN DEBT. INSTEAD, SHE FOCUSED ON DOWNSIZING AND STREAMLINING THE
OPERATIONS, CLOSING OUTLETS THAT WERE NOT TURNING A PROFIT.
• IN ADDITION TO INTERNAL RESTRUCTURING, MALAVIKA HEGDE STRATEGICALLY PARTNERED WITH BLACKSTONE AND SHRIRAM
CREDIT COMPANY TO HELP DECREASE EXPENSES AND INCREASE REVENUE. BY 2021, HER RELENTLESS EFFORTS RESULTED IN THE
COMPANY'S DEBT SHRINKING , AND BY 2023, IT HAD FURTHER DWINDLED TO A MANAGEABLE RS 465 CRORE.
• BUT WHAT MAKES MALAVIKA'S LEADERSHIP TRULY COMMENDABLE IS HER EMPATHETIC APPROACH TOWARDS HER EMPLOYEES. AS
THE BRAND BATTLED ITS FINANCIAL WOES, SHE MADE SURE TO REASSURE THE NEARLY 25,000-STRONG WORKFORCE OF CCD THAT
SHE WOULD FIGHT FOR THE BRAND'S SURVIVAL, SUCCESSFULLY INSTILLING TRUST AND CONFIDENCE DURING AN INCREDIBLY
CHALLENGING TIME.
THA N K Y O U