The Indian coffee king committed suicide once he defeated Starbucks but was forced to a dead end by the debt crisis
A perfect "Indian dream" is breaking.
The owner of Dream brought the coffee culture into India, which is used to drinking tea, but chose to leave without warning.
After days of large-scale searches, the body of VG Siddhartha, known as the "King of Indian Coffee", was taken by a fisherman on the bank of the river bank of Mangalore, a port city in southern India. It was discovered that the police stated that no obvious injuries were found on the remains.
The 60-year-old Sidhasha is the founder of Café Coffee Day, India’s largest coffee chain. Under his leadership, the Indian listed company “Café Coffee Day” became one of the world’s largest coffee brands .
His death caused a strong shock to the Indian industry and society. The company's stock price plummeted within a few trading days, and it is now almost at the end of the incident.
Coffee Day Museum's official website published a page to mourn Sid Hasa
The share price of Coffee Day Shop has plunged in recent days. Source: Indian Economic Times
According to the 2018 financial report of "Coffee Japanese Restaurant", it has opened 245 coffee shops in 1722 cities in India, nearly 5 coffee vending machines, and sold 1.8 million cups of coffee each year. It is the strong layout of "Coffee Day House" in India that suppressed the expansion of the international brand Starbucks in India; the former has 10 times more stores in India than the latter, and its popularity in India is far surpassing Starbucks.
Bringing "Coffee Culture" to India
On the evening of July 7, Sidhasha left Bangalore, where the company's headquarters is located. He told his family that he was going to the villa on the mountain, but asked the driver to drive the car to the port city of Mangalore. When he passed a bridge, he suddenly ordered the driver to stop, saying that he wanted to get off the car and let the driver go to the bridge. Waiting for him first.
When the driver left, he watched him call while walking along the bridge, everything was normal. However, more than an hour after the estimated time, Hidhasha still did not show up. The driver dialed his phone and turned it off. After being unable to find him, the driver hurried to call the police.
Afterwards, people discovered a letter that Sidhasha wrote to the company's board of directors and employees on July 7. He called himself "a failed entrepreneur."
In his letter, Sidhasha stated that he was facing a "serious liquidity crisis", which in turn caused him to be "tremendous pressure from borrowers and an unnamed private equity investor" ", making it overwhelming.
He said his company was also questioned by the Indian tax authorities. The Indian tax agency raided his office in 2017, accusing him of hiding part of his income.
Sid Haza wrote: "I want to say that I gave everything. I am sorry to disappoint everyone who trusted me. I struggled for a long time, but today I gave up." He wrote at the end "I Hope one day you can understand, forgive and forgive me."
Although Sidhasha professed to be a failed entrepreneur, many people disagree. In particular, the coffee chain company he created allowed Indians who did not drink tea to drink coffee, which affected the Indian way of life.
Indian journalist and writer Vivek Surendran wrote in a tweet, “For millions of Indians, the first cafe experience comes from the'coffee day hall', for many people like me In general, this experience is a leap compared to the roadside tea stalls."
Many people think that "Coffee Day Pavilion" introduces a culture. Indian batsman Ravichandran Ashwin said in memory of Sid Hasa, "Because of the "Coffee Day Pavilion", I and my friends Memories of going out for coffee together."
Rishikesha T Krishnan, a professor at the Indian Institute of Management in Bangalore, added that the coffee chain in Sidhasha not only introduced coffee culture but also created tens of thousands of jobs. He said, "He has not only created jobs for urban people, but also created jobs for rural people who want to work in modern retail enterprises."
Today's "Coffee Day Pavilion" employs more than 3 people, not only based in India, but also has retail stores in Austria, Czech Republic, Egypt, Malaysia and Nepal, and exports coffee to multiple markets including North America, Europe and the Middle East .
Coffee Day Shop
Provide social opportunities for rural people and realize Sidhasha's youthful dream.
He was born in a coffee-growing family. After graduating from college, he was determined to change the fate of the poor in rural India. However, in practice, he realized that rural India is full of corruption and nepotism, hindering any progress toward modernization. He said, "At that time I realized that I should be a wealth creator, not a wealth distributor."
After many years, he fulfilled his aspirations when he was young. He founded the "Coffee Day Pavilion" in 1996 and later married the daughter of SM Krishna, the former Indian Minister of Foreign Affairs, making him a coffee tycoon in India for political and commercial relations.
The annual sales of “Café Nikkan” also reached US$5.72 million (approximately RMB 40.2 billion), and he became one of the richest people in India, after the initial public offering (IPO) of “Cafari Nikkan” in 2015 At one time, he became a billionaire billionaire.
This was originally a perfect "Indian dream". Sidhasha’s success in the past represents everything that India’s rise to dreams of-entrepreneurs can create and realize new ideas in a modern country, and strive to change their lives and the surrounding environment of people around them. These concepts are undoubtedly radical for a society where class has solidified for thousands of years.
Sid Hasa is lucky. It happens that this old train in India is accelerating its transition and heading towards the road leading to modernization.
Sidhasha is fully aware of this. He said in 2011, "If I was born as early as 20 years ago, I will definitely fail".
Unbearable financial pressure
Perhaps Sidhasha is still too optimistic.
In order to continue to expand the scale of the "Coffee Nikkan", he began to continuously raise debts. The total debt of the Coffee Nikkan increased from 2011 million US dollars in 1.89 to 2018 million US dollars in 7.58. The heavy debt burden is undoubtedly the Sidha An important reason why Sha pushed into the abyss.
As of June this year, 6% of the company shares held by him and his family were used as loan collateral.
In a mature economy, Sidhasha may be able to obtain funding guarantees from different sources from the beginning, which is not possible in India.
This year, Sidhasha began to look for various ways to respond to creditors' requests. He tried to negotiate with Coca-Cola Company in the hope that he would purchase some of the shares in "Coffee House" and explore the possibility of other types of asset sales. For example, earlier this year, Sidhasha sold his 4.5% stake in Indian IT company MindTree for more than US$20.41 million, eager to expand his cash flow.
A person familiar with the situation said Sidhasha had spent most of the past two weeks in Mumbai trying to raise funds to repay debt. The person said that the coffee king has debts due in July and August.
Suspected of committing suicide due to financial stress, Hidhasha was the victim of India’s economic slowdown and tight cash flow.
In recent years, farmers in some parts of India have committed suicide because of the inability of funds to flow after crop prices plummeted. The fate of Sidhasha shows that this problem not only affects the bottom laborers, but has now spread to the level of the social elite.
The troubles and uncertainty caused by the "Coffee House" also sounded the alarm for foreign multinational companies investing in India.
Many multinational companies are currently stationed in India, hoping to catch the ride of India’s economic growth and explore the consumption potential of the Indian middle class, but many companies have found that there are only millions of Indian middle class who can really consume their products. This is also the reason why GM, which was optimistic about the prospects of the Indian market, withdrew from the Indian market in 2017. GM subsequently shifted its international business to countries with higher sales.
India is a very unique economy with huge potential, and it also faces many problems of its own. Xinhua News Agency Information
Madan Sabnavis, chief economist at Care Ratings, an Indian rating agency, said: "If this is not just a "coffee day hall" issue, but another 100 companies have also been pushed to the limit, or companies If there is no further financing and bankruptcy, then this is a crisis." He also added that this situation is not sustainable because everyone knows that the Indian economy is now stagnating.
Recently, the "Indian Times" published an article "Five Reasons for India's Economic Slowdown." The article believes that since 2016, the "bill of money order" and the reform of the Goods and Services Tax (GST) have hit consumption and exports, respectively. As its negative effects gradually subsided, the infrastructure leasing and financial services crisis triggered a credit crunch in non-bank financial institutions (NBFC) in 2018. In 2018, the world trade situation changed dramatically, and the GDP growth rate of all economies in the world was slowing.
India is a complex and rapidly developing economy. However, since this year, India’s economic growth has declined significantly. In the first quarter, India’s quarterly growth fell to its lowest rate in five years, only 5.8%.
Sidhasha is gone, but the problem remains to be solved. The latest news is that the new management of Café Japan has promised to provide bond investors with additional stock as collateral. But the stock price is not what it used to be, and even if collateral is added, the investment value of the bond is still worrying.
There is not much time left for the coffee shop.