G. Siddhartha Hegde, the founder of Indian café chain Café Coffee Day (CCD) and son in law of former Union Minister and Chief Minister of Karnataka has been found dead in a river. Siddhartha hedge was an energetic entrepreneur who built a multinational company with more than 4,000 crore rupees turnover out of scratches. But his company was in huge debt and he was not able to pay back to the private equity investors.
“I am sorry to let down all the people that put their trust in me. 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 lead to me succumbing to the situation,” reads the letter which is claimed to be suicide note of Siddhartha.
There has been huge furor of tax terrorism by the left-liberal establishment on the suicide of the CCD founder. “If VG Siddhartha letter is genuine (yet to be verified), then it only confirms what bizmem have been saying for a while now: tax terrorism is taking us back to the past, retarding investment/growth. And if this can happen to the son in law of SM Krishna, god help small bizmen,” tweeted India Today anchor Rajdeep Sardesai.
If VG Siddhartha letter is genuine (yet to be verified), then it only confirms what bizmem have been saying for a while now: tax terrorism is taking us back to the past, retarding investment/growth. And if this can happen to the son in law of SM Krishna, god help small bizmen.
— Rajdeep Sardesai (@sardesairajdeep) July 30, 2019
Given the limited understanding Sardesai have of economics, such stupidity is well expected. The primary reason behind Siddhartha’s decision to end life was huge debt accumulation but Sardesai wanted to spin it as tax terrorism to target the government.
Another member of the left-liberal cabal made similar claims of tax terrorism. “VG Siddhartha is a hard-working, understated & cheerful entrepreneur. Let’s hope he’s ok & wish SM Krishna family the best. India’s entrepreneurial climate, however, is turning toxic by the day, with tax terror & over-criminalisation added to an economic collapse we keep denying,” tweeted ThePrint founder Shekhar Gupta who came to limelight after fake coup story.
VG Siddhartha is a hard-working, understated & cheerful entrepreneur. Let’s hope he’s ok & wish SM Krishna family the best. India’s entrepreneurial climate, however, is turning toxic by the day, with tax terror & over-criminalisation added to an economic collapse we keep denying
— Shekhar Gupta (@ShekharGupta) July 30, 2019
These journalists and self-proclaimed intellectuals must check the balance sheet of Siddhartha’s company once to get some wisdom on the reasons behind the decision. The CCD founder has taken huge loans in personal capacity. As per a report by the financial daily Livemint, Siddhartha has taken 2,000 crore rupees loan in personal capacity to invest in plantation business.
“The business was not generating enough cash to service the outstanding debt, which had ballooned because of accruing interest, forcing him to borrow again and again, often at a higher cost to pay existing creditors. However, given the tight liquidity conditions in the market, he was having trouble raising fresh debt,” said a person who spoke on condition of anonymity.
This 2,000 crore rupees debt along with 6,547 crore rupees on the balance sheet of CCD group was cause of tension for Siddhartha. The IT department conducted raids on the properties of Siddhartha on suspected tax evasion and provisionally attached two million shares of Mindtree held by him. Siddhartha has sold 20.32 percent stake in Bengaluru-headquartered IT services firm for 3,200 crore rupees to L&T in order pay CCD’s debt.
CCD has posted profit in last three fiscal years. The company posted a net profit or 148 crore rupees in FY 18 but the profits posted by the company were not enough to pay the loans accumulated. The loans of 2,000 crore rupees taken in personal capacity were the other big problem for Siddhartha.
The CCD business was profitable but Siddhartha used the money from this business to invest in stock markets. “Though he had a good business running in the form of Café Coffee Day, he was diverting money to the stock market from CCD. His greatest mistake was to divert the money to the stock market from an otherwise smooth running business of CCD. He did not discuss much about his stock dealings as it was more of a personal investment,” said Kris Lakshmikanth, founder and CEO of executive search firm Head Hunters India Limited.
I did not know him & have no knowledge of his financial circumstances. I only know that entrepreneurs must not allow business failure to destroy their self-esteem. That will bring about the death of entrepreneurship. https://t.co/H4ysr8Ov3U
— anand mahindra (@anandmahindra) July 30, 2019
The most sensible response in Siddhartha’s case came from veteran industrialist Anand Mahindra. “I did not know him & have no knowledge of his financial circumstances. I only know that entrepreneurs must not allow business failure to destroy their self-esteem. That will bring about the death of entrepreneurship,” tweeted Mahindra.
Blaming the government or the death of Siddhartha is absolutely stupid and vulture journalism. If he had run from India with such a huge debt, these journalists would have blamed the government, as seen in the case of Mallya and Nirav Modi.