India's business community is in shock following the death of the founder of the country's biggest coffee chain, Café Coffee Day.
VG Siddhartha's body was found near a river just outside the city of Mangalore in south India in the early hours of Wednesday morning.
The tycoon had been missing since Monday evening, when it is understood that he asked his driver to stop his car and went for a walk, but did not return.
Shares in Coffee Day Enterprises, which owns Café Coffee Day, tumbled another 20 per cent on Wednesday to hit another all time low of 123.25 rupees. The board of directors held a meeting.
Mr Siddhartha owned a 32.75 per cent stake in Coffee Day Enterprises.
The matter “has dealt a sentimental blow to investors who are already undergoing a lot of pain”, said Deepak Jasani, the head of retail research at HDFC Securities. “The repercussions of this event on other entities is still being calculated.”
With more than 1,700 outlets in India, Café Coffee Day has more than ten times the number of stores that Starbucks has in the country.
But Mr Siddhartha was apparently struggling with his financial situation, it has emerged.
In a letter to Café Coffee Day's employees and board of directors that has been widely circulated in the Indian media, dated July 27 and signed by Mr Siddhartha, the veracity of which is still questioned by some, the entrepreneur said that he was under pressure from lenders and had been harassed by income tax officials.
“My intention was never to cheat or mislead anybody,” he wrote. “I have failed as an entrepreneur,” he added. He said he had “failed to create the right profitable business model” and that he should be held “accountable” by the law for his mistakes.
Many business leaders say that the case of Mr Siddhartha sends a worrying signal about the environment in India for entrepreneurs.
Mahesh Singhi, the founder and managing director of Mumbai-based investment bank Singhi Advisors, said India needs “a business-friendly ecosystem that recognises and rewards the role of the business community in nation-building initiatives”.
Mr Siddhartha, who was the son-in-law of the former chief minister of he south Indian state of Karnataka SM Krishna, came from Chikmagalur in Karnataka. In the 1990s, he bought coffee plantations and started exporting coffee. He founded his coffee chain in 1993 and its first outlet opened in Bangalore in 1996. That was long before its competitor Starbucks entered India in 2012.
Café Coffee Day gained popularity and helped to nurture a growing coffee culture in a country better known for being a nation of tea drinkers.
Earlier this year, Mr Siddhartha sold his stake of about 20 per cent in a software services company, Mindtree. Indian business newspaper The Economic Times last month, citing anonymous sources, reported that Mr Siddhartha was seeking a valuation of up to $1.45 billion (Dh5.32bn) from Coca-Cola for the coffee chain to sell a stake. Café Coffee Day outlets across the country were shut on Wednesday as a mark of respect.
