VG Siddhartha, founder of Cafe Coffee Day, found dead

UPDATE: Indian company names interim chairman. Letter from founder to the board and employees reportedly says: 'I gave it my all, but today I gave up'

VG Siddhartha was widely recognised for bringing the coffee shop culture to tea-loving India. Reuters

India’s Coffee Day Enterprises named SV Ranganath as interim chairman yesterday, after the death of the founder of the country’s biggest coffee chain, VG Siddhartha.

Mr Ranganath is a non-executive independent director, Reuters reported. The company has also set up a committee that will be vested with the powers of the chief executive and explore opportunities to deleverage Coffee Day Enterprises.

Siddhartha's body was found near a river outside the city of Mangalore in south India in the early hours of Wednesday morning.

The businessman had been missing since Monday evening, when he asked his driver to stop the car and went for a walk, but did not return.

Shares of Coffee Day Enterprises, which owns Cafe Coffee Day, tumbled 20 per cent on Wednesday to hit an all-time low of 123.25 rupees (Dh6.57).

Siddhartha owned a 32.75 per cent stake in Coffee Day Enterprises.

Police stand on a bridge overlooking the Netravati river near Mangalore, Karnataka. AFP

With more than 1,700 outlets in India, Cafe Coffee Day has more than 10 times the number of stores than Starbucks does in the country.

It emerged Siddhartha was apparently struggling with his company's financial
circumstances.

In a letter to Cafe Coffee Day's employees and board of directors that has been widely circulated in the Indian media, dated July 27 and signed by Siddhartha,  the entrepreneur wrote he was under pressure from lenders and harassed by income tax officials.

The veracity of the letter is still to be confirmed

He wrote: “My intention was never to cheat or mislead anybody.

"I have failed as an entrepreneur.”

He went on to write he had “failed to create the right profitable business model” and should be held “accountable” by the law for his mistakes.

India’s business community is in shock after Siddhartha’s death.

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.”

Many business leaders say Siddhartha's case sends a worrying signal about the environment in India for entrepreneurs.

Mahesh Singhi, the founder and managing director of Mumbai 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”.

Siddhartha, who was the son-in-law of the former chief minister of the south Indian state of Karnataka SM Krishna, was from Chikmagalur in Karnataka. In the 1990s, he bought coffee plantations and started exporting coffee. He founded his coffee chain in 1993 and opened the first outlet in Bangalore in 1996. That was long before its competitor Starbucks entered India in 2012.

Cafe Coffee Day gained popularity and helped nurture a growing coffee culture in a country better known for being a nation of tea drinkers.

Earlier this year, 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 Siddhartha was seeking a valuation of up to $1.45 billion (Dh5.32bn) from Coca-Cola for a stake in the coffee chain.

Cafe Coffee Day outlets across India were shut yesterday as a mark of respect for the founder.

VG Siddhartha, pictured in 2015. AFP