Employees of India's most-successful chain of coffee shops are left mourning the death of the founder of Café Coffee Day on Wednesday, after police confirmed that the body of V.G. Siddhartha was the same that they found floating in a river on Tuesday.
The entrepreneur almost single-handedly sowed the seeds of a coffee culture in India, a typically tea-drinking nation, a decade before Starbucks (SBUX) entered the market. As of its 2018 report, Café Coffee Day had 1,722 coffee shops across India, the largest of any chain, and 47,747 vending machines, with a handful of outlets in Nepal, Malaysia, the Czech Republic, Austria and Egypt.
Siddhartha owned 33% of parent Coffee Day Enterprises, which is listed on the National Stock Exchange under the ticker COFFEEDAY, although together with his family members they control around 50% of the equity.
Shares in the company are down by the daily limit of 20% on Wednesday, having fallen by the same amount on Tuesday. They are down 45% in all in 2019, to their lowest-ever level.
Coca-Cola (KO) had been rumored in the markets to be planning to buy a minority stake in Coffee Day. After the share price decline, the company has a market cap of US$378 million.
On Monday, Siddhartha was heading by car to the southern port city of Mangalaru, where he studied as a young man. Around 6 p.m., he asked his driver to stop on a bridge and let him out so that he could take a walk. The driver contacted the businessman's family when he did not return after an hour.
Police said they found his body downstream in the Netravathi River, near the sea.
Siddhartha left behind a letter, reprinted by The Economic Times, to the company's board of directors and "family."
"I would like to say I gave it my all," he wrote. "I am very sorry to let down all the people that put their trust in me. I fought for a long time but today I gave up ..."
Siddhartha said he "could not take any more pressure" from an unidentified private-equity partner who was forcing him to buy back shares. He said he had partly achieved that six months ago by "borrowing a large sum of money from a friend."
"Tremendous pressure from other lenders led to me succumbing to the situation," he added, and harassment from the income-tax authorities only exacerbated the situation.
Coffee Day is based in India's equivalent of Silicon Valley, the tech hub of Bengalaru, formerly Bangalore.
Siddhartha, 59, was not only an entrepreneur but also one of India's first venture capitalists. He was an early and successful investor in information/technology giants Mindtree (MNDQY) and Infosys (INFY) , backing them in the 1990s before their growth surges.
The financial pressures had led to a deal for some of his Mindtree holdings being blocked, and the income tax authorities had also seized part of his holdings in Coffee Day, he said. Siddhartha sold his shares in Mindtree in May to the Indian conglomerate Larsen & Toubro, although the deal appeared to have been concluded. Siddhartha told analysts on a call that he used the money to pay down debt.
"I sincerely request each of you to be strong and to continue running these businesses with a new management," the entrepreneur asked in his letter. "I am solely responsible for all my mistakes. Every financial transaction is my responsibility."
He said his auditors and team were not aware of certain transactions, and that he had withheld information over his dealings from "everybody including my family."
Siddhartha gave an accounting for the company's assets and liabilities, concluding that the assets outweigh the debts and will allow full repayment of any debts.
"My intention was never to cheat or mislead anybody," he wrote in the letter, dated July 27. "I have failed as an entrepreneur."
Opposition politicians have used the death to attack Prime Minister Narendra Modi's administration.
"His is the ugliest example of how agency persecution is wrecking India's growth story," Congress Party politician Milind Deora said in a message on Twitter (TWTR) . "Hope govt reflects on its anti-business policies!"
India's income tax department said Siddhartha had failed to disclose some of his income.
Siddhartha was the son of a coffee plantation owner, and opened his first coffee shop in 1996, in Bengalaru. The vertically integrated company still grows the coffee that it sells. It also has real estate holdings in technology parks, a resorts subsidiary, a logistics business, and financial advisory firm Way2Wealth.
The company's investors include Kohlberg Kravis Roberts (KKR) , the Mauritian holding company (NLS) , and two other Singaporean holding companies, Marina West and Marina III. It also lists Standard Chartered (SCBFF) as an investor on its Web site.
Coffee Day's financial statements show that Siddhartha had personally guaranteed the borrowing of himself and his family holdings. They had pledged 75.7% of their holdings against various debts.