Remember the shocking reports in 2019 about the suicide of V G Siddhartha, founder of India’s largest chain of coffee shops, Cafe Coffee Day. In December 2020, Malavika Hedge, Siddhartha’s wife, was appointed as the CEO of Coffee Day Enterprises Ltd (CDEL), the owner of the Café Coffee Day chain. The odds were against her. Yet, she has managed to script a wonderful success story.
V G Siddhartha’s shocking suicide- the beginning of CDEL’s troubles
V G Siddhartha’s suicide had also brought into focus the problems faced by CDEL.
The CDEL founder had asked his driver to take him to a bridge close to Mangaluru. As per the driver, Siddhartha went out for a walk. He wasn’t seen thereafter, and his body was recovered later.
A typewritten note was released by ANI. In the note, Siddhartha seemed to be apologising for “failing to create the right profitable business model.” He said that pressure from private equity partners and other lenders, and harassment from the income tax department had become unbearable.
This meant that CDEL, the owner of India’s biggest coffee retail chain, was in trouble. This was a matter of shock for people across the country.
After all, Café Coffee Day isn’t just a retail coffee chain, but also a part of the popular urban culture. CCD owns 572 cafes across 165 cities in the country, along with 333 CCD Value Express kiosks. It is a huge business with a total of 36,326 vending machines serving coffee to CCD customers.
Malavika Hegde takes over
Malavika Hegde, the wife of V G Siddhartha, took over as the Chief Executive Officer (CEO) of CDEL in December 2020.
This was quite a courageous move on the part of Hegde. CDEL had a debt of Rs 7,000 crore as of March 31, 2019. There was clearly a mountain of debt for Hegde to take care of. But Hegde, a heartbroken woman, decided to stand up to her problems instead of running away and fleeing abroad.
As CDEL CEO, Malavika Hegde had a number of challenges in her way. She had to reduce the company’s debt burden in order to keep her husband’s vision intact. She also needed to keep the company afloat as the livelihood of thousands of employees was at stake.
Malavika Hegde sets up CDEL for a miraculous recovery
Hegde hasn’t only proved to be courageous but has also managed to showcase her skills and talent as a CEO.
In August last year, CDEL said that it had reduced debt “significantly” and that the management was trying to put the company back on track.
According to its annual report, the net debt of CDEL stood at Rs 1,731 crore as of March 31, 2021. It said, “The total loan funds stood at Rs 1,779 crore which comprises of long-term borrowings of Rs 1,263 crore and short-term borrowings of Rs 516 crore.”
This was a considerable improvement in CDEL’s financial health. The company’s debt had stood at Rs 2,909.95 crore in FY 2020. CDEL would still want to improve further. But it has already managed to slash its debt burden significantly and is set to get back on track pretty soon.