Death of an entrepreneur

VG Siddhartha's suicide is an ugly example of how agency persecution is wrecking India’s growth story

AuthorPublished: 1st Aug 2019  12:00 amUpdated: 31st Jul 2019  9:50 pm

The tragic case of VG Siddhartha, founder of Café Coffee Day who committed suicide by jumping into a river in Karnataka, exposes the perils of running a business in India. Three disturbing issues arise out of this tragedy: Persecution by tax authorities, pressure from private equity partners to buy back shares and threats from lenders. Siddhartha, a successful entrepreneur who redefined the contours of the coffee business in the country, succumbed to the pressure and took his own life. In his searing letter to the Board of Directors and employees of CCD, he spoke about harassment by a Director General of Income Tax Department in the form of attaching his shares and blocking other business deals and how this unfair treatment led to a serious liquidity crunch. His words of exasperation “I am a failed entrepreneur” may well reflect the dark side of the entrepreneurship. This is also an ugly example of how agency persecution is wrecking India’s growth story. Known as the Coffee King of India, he brought about a coffee revolution in the country with CCD being the largest coffee chain spread over 209 cities. Since opening the first outlet in the heady post-liberalisation days in 1996, his firm attained the status of a superstar, being the first to corporatise the coffee business – much before international chains such as Costa or Starbucks came in. He hailed from a family of coffee gardeners and was able to successfully integrate operations – from growing to retailing, owning over 1,800 outlets across six countries.

There are too many government bodies that play an active role in the journey of a company and, more often than not, it only complicates the operations of the company while increasing the compliance costs manifold. The presence of multiple stakeholders puts a lot of pressure on the businesses. An entrepreneur has to handle various kinds of pressures from multiple stakeholders. There are various departments or wings of the government and they do not talk to each other and this complicates matters. The changing governance system is not enabling entrepreneurship to succeed. Though at a policy level, the government may be keen on promoting ease of doing business, the levers of implementation are still rooted in a past where nobody is above suspicion. When a tax officer begins with the assumption that every individual or institution is indulging in fraud, the result will always be unpleasant. And, this leads to overreach in tax penalisation. The reasons and the invisible hands that ended Siddharth’s life in this tragic way should be unearthed through impartial and fair investigation. A self-effacing person shunning the limelight for the most part, Siddhartha ensured that we can never again talk of coffee without remembering him.

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