The rise of V G Siddhartha from a young Masters in computers, who came to Mumbai to make a fortune, to being the undisputed coffee king of India is the stuff folklores are made of. How he borrowed a small sum from his father, invested in coffee plantation, made money on bourses and finally felt inspired to start Coffee Cafe Day (CCD) will be an unputdownable read should some decide to write this story.
Somewhere his ambition got better of him and though still not conclusively evidenced, him having indulged in some sort of financial jugglery through balance sheet management cannot be ruled out. But it’s also true that he was an extremely conscientious person and being unable to beat the burden of all the expectations and demands, he chose the softer option of ending his life.
Some very serious systemic issues have been raised in the aftermath of VGS’s death and let’s sincerely hope that like several other matters, his death doesn’t go waste and these systemic fault lines are erased from public memory. What are the issues highlighted by this tragic incident that require immediate fixing? To my mind, these are:
(1) Internal governance. Company’s must improve internal governance , especially for related party transactions and diversion of funds. We could be sitting on another time bomb with one promoter having raised grave issues against the other in Indigo.
(2) Sanctity of balance sheet- Promoter, directors, auditors, bankers need to collaborate and ensure that balance sheet reveals true state of affairs sans any artificially manufactured facts or figures.
(3) More friendly ecosystem- Not every default may be wilful and definitely not a fraud. Even the investigating agencies viz. CBI, SFIO, ED may not have bandwidth to handle so many cases ! To treat every case of default as fraud and nexus between borrower and financier may not be conducive to the economic growth of the country.
(4) Tax demands and attachment of accounts by the authorities for prolonged period of time can choke the company to death by blocking its working capital. In the event of doubt, further investigation must be undertaken but it should be unobtrusive.
(5) Bankers and promoters should build mutual trust and confidence so that in the times of emergency, company can get some relief and leeway instead of funds getting recalled.
We must make India an investor friendly, business friendly and preferred place of doing business and the tax, banking and investigative regimes must be made more sensitive. This will be a fitting tribute to a great visionary, who almost succeeded in building a chain that had the capability of becoming the first Multi country brand, till his heroic journey was cut short by cruel destiny. For now, let’s hope CCD and other businesses that VGS built survive and thrive. He might have died young and so did Steve Jobs – but like Apple acquired iconic status after his death, do should CCD after VGS’s death, which the managers/other directors running CCD and other companies must ensure!