Sugata Srinivasaraju / A fall that had been brewing

Perspective: 1

"The short-term loan he needed to rescue his organization was not coming through. He wondered if one BJP MP was working overtime ‘to fix him’. At the same time, his father, whom he idolized, slipped into a coma. Things on the personal as well professional front were falling apart"

The Netravati river that VG Siddhartha Hegde, billionaire businessman and founder of Café Coffee Day, jumped into on Monday, July 29, was tranquil on the surface. But beneath, the seasonal currents were terribly strong. The spot of his suicide was an estuary. The sea was only a kilometre away. According to locals, the bodies of those who fall there, during this time of the year, are usually never recovered. The currents quickly push the cadavers deep into the sea.

Did Siddhartha, the diligent stock market player, who knew the value of every number after the decimal point, contemplate the site of his end? Or, was it an impetuous decision? Like the Netravati, on the surface, he appeared calm to people who had seen him that morning, but he was surely engulfed inside. Did he want to mysteriously disappear, be washed away into the sea, never to be found? Never to allow people to read failure on his visage, which had always meant success to the world? Was it against his wish then, that his body was washed ashore?

We will never ever know

What we know from his friends and associates is that there had been palpable signs of stress ever since the income tax raid had taken place on his establishment in September 2017. “Two days after the raid, he asked me not to underestimate his mental strength,” a friend says. “But as days passed, he felt the ground beneath him was shrinking. More recently, the sale of Mindtree shares was nerve-wracking. He felt the tech company’s founders did not understand his financial precariousness.” He also apparently suspected that the income tax DG, whom he refers to in his purported final communication, was being influenced by a tech company honcho who lived in the same residential complex. He was hurt that people he had helped and supported were defeating him.

Amidst this, the Coca-Cola India deal to buy Café Coffee Day fell through, and he was very upset that the information was leaked to the press. The short term loan he needed to rescue his organization was not coming through. He wondered if one BJP MP was working overtime ‘to fix him’. At the same time, his father, whom he idolized, slipped into a coma. Things on the personal as well professional front were falling apart. Only the peace and quiet of his Chikmagalur estate could hold him together, or so he thought.

“His wife and sons understood his fragility,” the friend adds. “They took care of him like a baby.”

Like whipped cream frappe

This portrayal makes Siddhartha a victim, as someone who was conspired against. That is anyway a dominant narrative that has taken root. His friends, relatives, colleagues, admirers, and the Congress in Karnataka, especially the likes of DK Shivakumar, have perpetuated this line. Some may be doing so to build a defence for their own past actions, and caveat possible future implications, but, most have used it to deftly characterize the Modi-Shah government as cold and cruel.

Even Vijay Mallya used Siddhartha’s death to create a brotherhood and victimhood. The two were related. Siddhartha’s sister-in-law, Shambhavi is married to Mallya’s stepbrother, Umesh Mohan Hingorani. Interestingly, Mallya and Siddhartha’s debt exposure is similar, if one goes by figures doing the rounds.

In this narrative and rhetoric, much like a whipped cream frappe, there is perhaps a kernel of truth and exaggeration, but were Siddhartha’s methods, actions, ambition and avarice, in some ways responsible for rendering him vulnerable?

Did he do what other businessmen usually do? Was he an innocent entrepreneur? Did he not work the system? Did his businesses not have a formidable political air cover? Should he be lauded for the jobs he created, the philanthropy and the unfailing humility he displayed? Apparently not, according to the income tax department, obviously, but also according to well-regarded activists like SR Hiremath, who partnered with Prashant Bhushan in the Supreme Court to bring the mining mafia to its knees in Karnataka.

On the very day Siddhartha’s body was recovered, within hours, Hiremath held a press conference in Hubli. He offered his condolences, but in the same breath, also reminded people of Siddhartha’s ‘scandalous’ business practices and ‘illegal’ wealth generation. He especially referred to his two companies, Way2Wealth (a Coffee Day company) and Alpha Grepp (apparently operating from Singapore and Hong Kong), and demanded that they be thoroughly probed in what is known as the dark fiber, or the co-location scam. He also raised questions on his investments abroad. Not many dailies gave space to the presser the next day.

"The ascension to power of his father-in-law coincided with the real estate boom, the mining boom, and the IT boom in Karnataka. Siddhartha had the acumen and resources to exploit this opportunity to quickly build an empire"

Building an empire

In May 2019, SEBI had imposed a heavy penalty of Rs.15.34 crore and other strictures on Way2Wealth. As reported by the Times of India, the Coffee Day company had “used a glitch in NSE’s trading system to get faster access to the trading engines, and NSE knowingly allowed them to exploit the glitch to make illegal gains.” It was in August 2015, through a letter from a Singapore-based whistle-blower that SEBI had learnt of the co-location scam and started the investigation. Incidentally, Way2Wealth was earlier known as Sivan Securities, which had helped underwrite the Infosys IPO in the early 1990s when the technology company’s stocks were undersubscribed.

This was not the first time that Hiremath had spoken about Siddhartha and his business transactions. He had, in fact, written three detailed letters (copies are with Mirror) between August 2015 and March 2017 to the prime minister, finance minister and member secretary of the SIT on black money, listing 21 companies and organizations of Siddhartha and his friends and relatives, all of who were allegedly “involved in generating black money.” The letters delineated the modus operandi of the companies as well as specific cases that had created serious doubt. Hiremath told Mirror: “Later, I also met income tax officials and they acknowledged that my letters had been forwarded to them, and they were looking into it.”

In Karnataka’s political lore, there is an unconfirmed whisper about a case from 1997-98 when Siddhartha got into trouble with a foreign company in connection with a real estate project. He was bailed out because SM Krishna, his father-in-law, was slated to take over as Karnataka Congress chief, and lead the party to polls in 1999. Krishna becoming chief minister created a shield around Siddhartha and put him on a spectacular growth trajectory that surpassed his triumphs until then.

The ascension to power of his father-in-law coincided with the real estate boom, the mining boom, and the IT boom in Karnataka. Siddhartha had the acumen and resources to exploit this opportunity to quickly build an empire. “His was a typical case of crony capitalism. He worked the system to his advantage, but the same system perhaps did him in too,” says one of his relatives.

People who saw Siddhartha operate then, recall that he not only mixed politics and business with relish but introduced marketing and branding into government and governance. To Krishna’s penchant for a white-collared image, he added a technocratic layer. Bengaluru became more important than Karnataka, and that is when people like Nandan Nilekani were brought in to run the Bangalore Agenda Task Force. Narayana Murthy was appointed as chairman of the Bengaluru International Airport Limited. It appeared as if Infosys was running the city. Also, K Jairaj, a senior IAS officer, and importantly, husband of Siddhartha’s colleague, Poornima Jairaj, came to run Krishna’s CMO as principal secretary.

One senior bureaucrat recalled that Siddhartha would be in the room when he went to discuss budget matters with the chief minister. “I would not begin my official discussions as long as he was in the room. He was very smart, he understood what I was doing.” Soon, the Krishna CMO ensured that they did not have to deal with the officer. They transferred him.

According to a senior BJP leader, “Siddhartha reaped the benefit of a complimentary relationship that SM Krishna had established with HN Ananth Kumar, a minister in Vajpayee’s cabinet. As civil aviation and later urban development minister, Ananth Kumar supported Siddhartha’s enthusiasm for expanding the Café Coffee Day chain.”

"In Karnataka’s political lore, there is an unconfirmed whisper about a case from 1997-98 when Siddhartha got into trouble with a foreign company in connection with a real estate project. He was bailed out because SM Krishna, his father-in-law, was slated to take over as Karnataka Congress chief, and lead the party to polls in 1999"

The king-maker

Around this time, Siddhartha’s experience with power, made him fall into the trap of imagining himself as a perennial king-maker. He quite liked the role. In 2011, when Karnataka BJP MLAs rebelled, and were holed up in Chennai, he apparently picked up the tab for their five-star boarding and lodging. There are many such things mentioned in conversations with politicians. “He was adept with political philanthropy,” the BJP leader exclaims.

This BJP leader was also present in S Bangarappa’s house, in New Delhi, when Siddhartha called on behalf of his father-in-law to urge the veteran politician not to join the BJP. This was in 2003, and the call came just before they left for Vajpayee’s Race Course Road residence for the formal induction. Ironically, in 2017, SM Krishna himself crossed over to the BJP. People thought that he was doing so to save his son-in law’s business. To attribute all of Siddhartha’s achievements to his father-in-law’s stint at the helm would be discounting his own genius at the stock market, which was on display in the 1980s and 1990s. He was in many ways self-made. His family had coffee plantations.

His father, Gangaiah Hegde and uncle Keshava Hegde, had branched out in the 1960s from the illustrious line of Thanudi Hegdes in Chikmagalur to make it big in the coffee world. Their over 450-year-old palatial ancestral home is now a priceless heritage property. Girish Karnad shot Utsav with Rekha in the lead, in this home. During the Emergency, one of Siddhartha’s Thanudi zamindar uncles was arrested under MISA for keeping bonded labour. Like with big zamindars, there was wealth that passed from generation to generation, there was social and political capital, but there was not much liquid cash.

‘Everybody’s son’

To a plantation life that was staid and slow, Siddhartha introduced the speed, ambition, high growth, and also perhaps avarice of the Mumbai stock market. “I don’t want to stay under the big banyan tree of my ancestors,” he had declared to a cousin in his late teens. It was an incredible cultural transformation.

A relative explains: “When he wanted to mobilize money for his business in the mid-1980s, he went to the traditionally rich Chikmagalur planters and told them that they were getting around 12 per cent for bank deposits, but he could give them over 20 per cent. He delivered and earned the trust of the community. A cousin recounts: “My mother always said he was everybody’s son in the extended family. He was there for their problems, be it financial, marriage or alcohol-related. He was very human.” By 1991, he had become so wealthy that he bought back a single plot of 1,000 acres of Kudregundi coffee estate, which had slipped out of his family in the past. His arranged marriage to Malavika, Krishna’s elder daughter, only propelled him into a sea of greater opportunity.

Every August 23, his birthday, he would journey alone to Belur Math, Kalighat and spend time watching ripples spread and disappear on the Hooghly. His family were followers of Ramakrishna Paramahansa and Sharada Devi. He would have marked his 60th had he turned up there this year.

Perspective: 2

Coffee and froth: For VG Siddhartha, a lot could happen over coffee

"A few years ago, Siddhartha told a students’ summit at IIT Kanpur that a member from the first batch of the school was a manager at a restaurant in New York. “If not for the vocational school, our youths would not get a job paying more than Rs.3,000-Rs.4,000 per month,”"

VG Siddhartha’s CCD brand carried the tagline ‘A lot can happen over coffee’. And for V G Siddhartha, it did. How then did the 21-yr-old heir of a fortune who decided to carve own path, gave India its first coffee chain, was among the first to spot the IT trend, cashed in on Bengaluru’s real estate boom, and moved among the powers and shakers, end up as a 60-yr-old broken man on a bridge? The Indian Express on the life and death of India’s coffee king.

In Karnataka’s coffee-growing hill district of Chikamagalur, V G Siddhartha, entrepreneur and founder of the Cafe Coffee Day chain dotting urban India, is considered a demi-god. A vocational training school Siddhartha established in Chikamagalur in 2004 has provided over 10,000 youths from the region 35% of them girls free education in computers, English language and soft skills, helping them find jobs in the services industry.

A few years ago, Siddhartha told a students’ summit at IIT Kanpur that a member from the first batch of the school was a manager at a restaurant in New York. “If not for the vocational school, our youths would not get a job paying more than Rs.3,000-Rs.4,000 per month,” he said.

A soft-spoken, reclusive individual who shunned public appearances till they became necessary for his Coffee Day brand, 60-year-old Siddhartha had broken away from the family tradition of coffee-growing early on, at the age of 21. The story in Chikamagalur is that Siddhartha’s father Gangaiah Hegde was reluctant to let his son go his own way, and that it was S M Krishna, a Union Minister at the time, a family friend and a fellow Vokkaliga, who brought him around. In 1988, Siddhartha got married to Krishna’s older daughter Malavika. They have two sons, Amartya, who has a business degree from a foreign university and was being groomed to take over from Siddhartha, and Ishaan, a student.

In a talk in 2016, Siddhartha recounted this early part of his life. “My family has been growing coffee since 1870, we had around 300 acres. I was the only son… My father had about Rs.15 to Rs.20 lakh income every year from land. I wanted to do something on my own… He gave me Rs.7.5 lakh. He told me that by chance if you lose the money, come back and work on the estate. If you succeed, all the best to you.” As Siddhartha’s funeral was being held on July 31, his ailing 95-year-old father lay unwell in a Mysuru hospital.

For nearly a decade after leaving home, Siddhartha worked as a stock-broker in Mumbai and Bengaluru. He held a job as a research analyst for Morgan Stanley (then J M Financials) in Mumbai, and in the 1980s started a brokerage firm in Bengaluru with part of the money given by his father. “I made a lot of money between 1985 and 1992. The markets were so inefficient that inter-market arbitration allowed me to make Rs.1 lakh every day,” Siddhartha said a couple of years ago.

Rise of the coffee king

Siddhartha used these gains to gradually buy up coffee land in his home district. “By 1992-93, I had almost 5,000-6,000 acres. The first property I bought was for Rs.10,000 per acre. Somebody with equity trading and research knowledge can finance deals much faster than guys on the street,” he said in his 2016 talk. In those early days, Siddhartha’s firm was called Amalgamated Bean Coffee (ABC) Trading Company, which later became Coffee Day Global.

When Manmohan Singh, as Finance Minister, unshackled coffee-growers and traders from selling only to the state-run Coffee Board in 1993 as part of liberalization, Siddhartha hit pay dirt. “I was India’s biggest coffee trader. By 1995, I became India’s biggest commodity trader. There was a frost (affecting the coffee yield) and coffee prices went up three times. I honored all my commitments and became a darling of international buyers and traders,” he said.

Siddhartha had by now crores of trading profit and two factories, and bought six more. He bought sick units, German machines. He also realized that if it was this easy to build India’s largest commodity/coffee trade house, “the big traders of the world can also throw me out in no time”. Operating only as a coffee trader would not allow him to enjoy market leadership for too long.

Around this time, Siddhartha had a chance encounter with the owner of German coffee retail chain Tchibo — the second-largest coffee chain in Europe — who had built a business worth USD 25 billion. “They started in 1948 with a 10×10 shop in Hamburg… I could not sleep that night thinking of the potential that lay ahead,” Siddhartha once said.

A retail brand, he realized, was just the natural corollary to his coffee-growing and trading business.

TOO BIG TOO FAST

Even though Siddhartha was ahead of his times when he decided to establish the Coffee Day chain of cafes over two decades ago, his audacious expansion drive across diverse businesses on the back of aggressive borrowing from banks, MFs, NBFCs, PEs and even friends may have tripped him. Also, his political connections, which once provided him strength, became his Achilles’ heel when power equations changed.

ABC to CCD to IT

Thus was born Cafe Coffee Day. Its first outlet, in 1996 in central Bengaluru, added an extra perk to its cosy environment and good coffee: the Internet. At a time when many accessed the Internet through cyber cafes, the early CCDs had computers that customers could use.

Siddhartha next began diversifying into sunrise sectors of the time like information technology. He was an early investor in firms like Mindtree Technologies Ltd and Kshema Technologies. “Although he is known as the coffee king, few people know he supported the IT industry at a time when there were very few investors,” an advisor to Siddhartha said. The coffee king, in fact, confessed he considered IT czars like Azim Premji, Nandan Nilekani and N R Narayana Murthy among his inspirations.

By 1999, father-in-law S M Krishna had become the CM of Karnataka. Those who know him say that despite this, Siddhartha remained down to earth and humble. “He would walk any visitor who came to his office to the lift. If it was a very important visitor he would walk them down to the entrance. If there was a social event in the family of an employee, he would attend irrespective of the stature of the employee if invited and in town,” the aide said.

Actor Raghavendra Rajkumar said when forest brigand Veerappan kidnapped his father, the thespian Dr Rajkumar, in 2000, Siddhartha kept the family together. “We didn’t know what to do, whom to approach… Siddhartha said, ‘You are family and you have the right to meet us any time’,” Raghavendra wrote in an article following the businessman’s death.

However, that episode also marked the change in the profile of Siddhartha from a low-key businessman to a key power centre. A book written by then state police chief

C Dinakar, Veerappan’s Prize Catch: Rajkumar, spoke about how Siddhartha and a police officer had travelled twice to Chennai with a ransom for Rajkumar’s release.

Meantime, Siddhartha’s fortunes kept growing, as he ventured into real estate, created SEZs and tech parks around Bangalore (later Bengaluru). Around 2006, Siddhartha diversified into the hospitality business, launching the high-end luxury eco-resort enterprise, Serai Resorts, with properties in Chikamagalur and the Bandipur National Park region. In 2010, the business attracted global private equity investor Kohlberg Kravis Roberts (KKR).

By 2019, Coffee Day Enterprises (CDE) had ballooned to a nearly Rs.8,000 crore worth enterprise, even as CCD outlets crossed the 1,700 mark.

"The expansion of Siddhartha’s businesses abroad including coffee outlets in Vienna and Prague and agricultural holdings also coincided with Krishna’s tenure as Union minister. One of Siddhartha’s dreams was to make his Coffee Day brand globally recognized"

Backroom to frontlines

In 2017, when Krishna ended a 46-year association with the Congress to join the BJP, many Congress leaders in Karnataka suggested that the 85-year-old was changing his loyalties to protect the business interests of his son in- law.

While Siddhartha was already a successful businessman by the mid-1990s, Krishna’s 1999-2004 tenure as CM and May 2009-October 2012 stint as External Affairs Minister provided huge leverage for his interests. RBI records for foreign investment outflows from India for 2007 to 2013 reveal that Siddhartha’s ABC channeled nearly USD five million of investment (out of a total USD six million) to a Cyprus-based subsidiary firm, A N Coffee Day International Ltd.

The expansion of Siddhartha’s businesses abroad including coffee outlets in Vienna and Prague and agricultural holdings also coincided with Krishna’s tenure as Union minister. One of Siddhartha’s dreams was to make his Coffee Day brand globally recognized, as he lamented the lack of Indian brand names on high streets like Oxford Street in London or Orchard Street in Singapore.

Congressmen claimed that by joining the BJP, Krishna wanted to ensure his family’s interests were protected if the NDA government went after its rivals to stifle poll funding. Krishna’s second daughter incidentally is married to the stepbrother of Vijay Mallya, the liquor baron whom the government has made an example of for bad loans.

In his statement on Siddhartha’s death, Mallya drew that parallel. “I am indirectly related to V G Siddhartha. Excellent human and brilliant entrepreneur. I am devastated with the contents of his letter. Government agencies and banks can drive anyone to despair. See what they are doing to me despite the offer of full repayment,” he said.

The tax dragnet

But, in the end, Krishna’s change of loyalties did not shield Siddhartha. An income tax investigation in 2017 against D K Shivakumar, one of Krishna’s proteges in the Congress, is believed to have put the authorities on the trail of Siddhartha. Like Siddhartha and Krishna, Shivakumar is a Vokkaliga.

In his purported suicide note, Siddhartha cited troubles with tax authorities. “There was a lot of harassment from the previous DG Income Tax,” the letter said.

The Income Tax Department has denied undue pressure, saying it “acted as per provisions of the Income Tax Act”. “The investigation in the case of Sri V G Siddhartha and Cafe Coffee Day arose from the search in the case of a prominent political leader of Karnataka. It is based on the unearthing of crucial evidence of financial transactions done by the CCD in a concealed manner,” the department said in a statement after Siddhartha’s death. “A person holding Singapore citizenship was also covered in the search action. He was found with unaccounted cash of Rs.1.2 crore and admitted the cash belongs to Siddhartha,” tax officials said.

Sources said, “the prominent political leader” referred to by the department was Shivakumar, and that probe had shown that Rs.20 crore had been transferred to him through CCD-linked entities. Officers also claimed to have found links between Shivakumar and Siddhartha during a 2017 search on a former director of Siddhartha’s Cyprus-based firm A N Coffee Day International Ltd, who is a Singapore citizen.

Within a month of the searches against Shivakumar and his aides, in September 2017, the Income Tax Department cracked down on 25 premises linked to Siddhartha.

Shivakumar, who was with Siddhartha’s family for his funeral, said on social media, “It’s unbelievable that a courageous man like him would resort to this. I urge a thorough investigation… Shri Siddhartha and his family were closely known to me for decades.”

On the tax evasion cases against him and his associates, the Congress leader has said, “We are ready to face these challenges.” His brother, MP D K Suresh, has said, “We are being targeted by the BJP. They have instructed officials of the CBI, I-T and ED to do these things.”

Cup of woes

At least three persons close to the group told The Sunday Express that Siddhartha compounded his troubles by ignoring a fundamental tenet of business in his passion to build a big brand. He kept pumping money into CDE by raising debt, even as profits were not in sight.

So, even as the consolidated profit of the company stood at Rs.147 crore in the year ended March 2019, around the same levels as last year, the consolidated finance charges for CDE rose sharply from Rs.349 crore in FY’18 to Rs.456 crore in FY’19.

Insiders and people who have worked with the group say debt had been an issue with the group since 2008. Apart from Coffee Day, some of the burden on the group and Siddhartha’s personal asserts was brought on by overseas business interests. “All of Siddhartha’s foreign ventures turned out to be white elephants,” says a source, giving the example of Siddhartha’s investment into a timber import business in Ghana, which went bust. “There was a sense that if a strong brand is built, he could monetize and exit, but that could not happen.”

The company’s filing with stock exchanges and Registrar of Companies shows that as the debt level of the CDE group rose to Rs.6,500 crore, Siddhartha borrowed from one to repay the other.

Over the last few years, Siddhartha had mortgaged his immovable properties and pledged a large part of his shareholding in CDE, other group companies and Mindtree as security to raise funds. While only 12.66% of Siddhartha’s holding of 32.75% in CDE (i.e. 38% of his holding) was pledged till March 31, 2018, this had gone up to 71% as on July 1, 2019. In fact, by then, over 68% of the promoter holding of 59.74% in CDE had been pledged.

In May 2019, CDE and Coffee Day Trading Limited, also promoted by Siddhartha’s family, sold their entire stake in Mindtree, along with Siddhartha’s personal stake, to L&T Ltd, for Rs.2,100 crore (the net of expenses and taxes). The company said this would “pare down the Coffee Day Group’s debt”.

Some of the privately held companies of Siddhartha, including Devadarshini Info Technologies, Coffee Day Consolidations, Gonibedu Coffee Estates and Sivan Securities, also piled debts, amounting to over Rs.3,500 crore.

"Around 2006, Siddhartha diversified into the hospitality business, launching the high end luxury eco resort enterprise, Serai Resorts, with properties in Chikamagalur and the Bandipur National Park region"

The end

Siddhartha indicated some of the stress he was under in his “suicide letter”, saying, “I fought for a long time but today I gave up as I could not take any more pressure from one of the private equity partners forcing me to buy back shares, a transaction I had partially completed six months ago by borrowing a large sum of money from a friend. Tremendous pressure from other lenders led me succumbing to the situation.”

While the letter refers to a private equity partner, a source in the financial services industry said Siddhartha was under pressure from a distress debt fund that had provided the family money in January-February 2018 to buy back shares of CDE from KKR. In February 2018, when KKR reduced its holding in CDE from 10.33% to 6.07%, the exit seems to have been provided by the promoter family. Shareholding data show that the same day, the shareholding of Siddhartha’s wife Malavika, jumped from 1.44% to 4.05%.

According to business associates of Siddhartha, they were under the impression that “the KKR situation had been worked out” and that things were under control. “There seems to have been a cascading effect where one crisis was leading to another and there seemed to be no let-up,” a business associate said.

The CDE board has sought investigations into Siddhartha’s “suicide letter”, including his claims of harassment by tax authorities. “The Board took cognizance of statements… relating to financial transactions outside the knowledge of the senior management, auditors and the Board. While the authenticity of the letter is unverified and it is unclear whether these statements pertain to the Company or the personal holdings of Mr VG Siddhartha, the Board took serious note and resolved to thoroughly investigate.”

The Congress has called Siddhartha’s death “the result of harassment by I-T officials” and said it shows the “decline of India’s entrepreneurial position with tax terror”, a statement dismissed by the BJP, now in power in the state, as “opportunism by vultures”. “Investigation will reveal the facts. Until then respect the sentiment of masses and display some humanity,” BJP Karnataka unit said.

Chief Minister B S Yediyurappa as well as several leaders from the Chikamagalur region, where the BJP is dominant, were among those who turned up to pay their respects to Siddhartha in his home town.

What remains undisputed is Siddhartha’s legacy as one of India’s pioneering entrepreneurs. And at least one part of his “suicide letter”. Siddhartha wrote about the thousands of jobs he had created, in his companies, subsidiaries, IT sector, and regretted that after “37 years with strong commitment to hard work”, he had “failed to create the right profitable business model”.

Perspective: 3

Making sense of Sidharth’s death

"Sidharth was never a smart entrepreneur... He was just incredibly lucky.......That just ran out one day....!!! For those who are feeling sad, sorry and disheartened, please read..."

"He came out as a simple dressed, low ego, honest, self-made, brilliant entrepreneur. The reality was exactly opposite; he wanted to go down as a great warrior, a hero fighting against the system"

Sidharth was never a smart entrepreneur... He was just incredibly lucky.......That just ran out one day....!!! For those who are feeling sad, sorry and disheartened, please read...

Luck number 1: Born into a well to do family that inherited a well-established coffee plantation from the British (exact acreage still unknown, but let’s say fairly big).

Luck number 2: Started trading in stocks after Indira Gandhi’s death, when Rajiv Gandhi was slowly opening up the Indian economy, stock market culture slowly evolved.

Luck number 3: Opens Sivan securities, an investment, stock broking around Manmohan Singh’s reforms in 1991.

• You know, Bombay stock market went up 500% in 15 months, most companies went 3000 to 10000% in two years.
• For example, your one crore became 100 crore easily. He even admitted in an interview, apparently, money came so easily that he got bored with it and so wanted more adventure.
• Almost all of the guys who were in the stock market at the time got success, but unlike other smart stock traders of the time (who are all still billionaires)—being from a farming background, he didn’t believe in easy money, hence he started buying land instead of re-investment in stocks, like many Gujarati investors did.
• But luck strikes again, marries SM Krishna’s daughter and through that becomes Mallya’s relative. So might have learnt new “skills” apart from his plantation and stock trading skills.
• Then he started ABC coffee business, just when the coffee industry was opened up in India and the coffee board was partly dismantled around 1993.
• One could argue, having political and entrepreneurial links, he must’ve started those businesses with inside knowledge about those policies in advance, that gave him an advantage (like many other politically connected entrepreneurs)
• First unluck strikes, sells Infosys too soon...remember he had bought Infosys at IPO, in 1993.
• But luckily, his father-in-law becomes deputy CM and all the stock trading, plus other profits go into buying land, increasing acreage—we all know how transparent buying land in India can be.
• Then opens his first CCD in 1996, even though JDS in power in Karnataka, in centre Congress is supporting JDS, so father-in-law still has a lot of clout in Karnataka.
• Second setback, when Vajpayee comes to power, dotcom bubble bursts, Mallya falls out with SM Krishna.
• But again, incredibly, luck favours him. His father- in-law wins in 1999 and becomes CM. International coffee prices start going up, he starts a new venture Mindtree, and diversifies, reboots his stock trading and investment firm Sivan Securities to Way2Wealth...
• Does well for five full years, opens many CCD outlets, keeps buying land in Chikmagalur, opens up an IT park (a global village tech park of nearly 120 acres.
• Goes to the next level, probably crosses the billionaire line for the first time.
• But for the third time lucks runs out again, Krishna loses in state in a shock result, and coffee price falls to a 28-year-low in 2003.
• But incredibly, stock market crazy boom starts in the same year with George Bush pumping up liquidity globally, all the stock markets around the globe on steroids.
• More than 50 countries’ GDP grows at 5% +, between 2003 and 2008. Plus it is IT golden era and so is the Bengaluru real estate boom.
• Makes new friends like DKS, KJ George, etc, who are big players in and around Bengaluru at the time.
• So he survives for the third time. Remember his buying, leasing and benami coffee estates of nearly 12,000 acres (some say ~ 20,000) and opening of next CCD outlets never made any real profits.
• And he starts to keep pumping money from all these totally legal investment and stock market profits, and also the black money, hawala money from the grey area of land deals, IT park, political kickbacks.
• For the first time, he gets limelight as coffee king, emerges out of Krishna’s shadows. Becomes more visible in media, lists CCD in the market and creates good buzz.
• Personally holds around 35% shares, other family and benami (remember two other main promoter holdings are registered in Mauritius). We all know how these kind of transactions worked during UPA era right.
• Anyway, the final nail in the coffin came as Modi, who for the right reasons started clamping down on these unviable, benami, grey economy, black economy and nepotistic businesses.
• Surprise, Krishna joins BJP to everyone’s shock.
• Remember, earlier, he had resigned as Governor of Maharashtra, resigned as External Minister of India (because both of them didn’t make any money).
• But Modi being Modi, didn’t let him off the loop, Krishna was also side-lined. His CCD Ponzi scheme (of opening new outlets, promoting it and ultimately selling to Starbucks / Coca-Cola) was falling apart.
• In the same time international Arabica price fell down nearly 40%, most of his coffee was Arabica.
• It all happened simultaneously, in the last 3-4 years.
• So for a person for whom lady luck smiled for so long, didn’t know what to do.
• So the first real crisis with no light at the end of the tunnel and Modi returning to power.
• He was never a bright entrepreneur, he was just a very lucky, mediocre coffee planter, who accidentally became a politically well-connected “businessman”.
• Well all along his journey, the only 100% white money was from his trading, investments, broking firm, which supported him all along for his idiotic dreams of competing with Starbucks.
• Well, economics 101 says, it never works, never worked in the past in any country...they tried many fake KFC, McDonalds, Subways and Burger Kings, in many countries.
• It simply never works, so his own idiotic quotes like “An entrepreneur never retires only dies”, blah blah and hidden ego backfired. Aren’t there far more successful entrepreneurs in the past, who have successfully built a large sustainable business and passed it on to smart management team, and retired? Let’s say Bill Gates to start with, he is also similar age, retired long ago.
• Though he came out as a simple dressed, low ego, honest, self-made, brilliant entrepreneur.
• The reality was exactly opposite; he wanted to go down as a great warrior, a hero fighting against the system.
• Yes, it’s a sad loss, but I won’t feel sorry for him.
• And more importantly, let’s not blame Modi for it. All these flawed business models need to bite the dust for India to progress in an organized way.
• Whatever policy we had in the past are grossly outdated for a democratic country like India (might work in Russia or China etc, where politics never change).
• So please pass the message on and let’s support the Government in cleansing the rotten Indian businesses one by one, even if it leads to people running out of the country or jumping off the bridge (quite literally in this case, sadly.)

(Disclaimer: This article is a WhatsApp forward. Corporate Citizen does not independently vouch for its authenticity.)