A few years ago, if you wanted a cup of joe, you just had to walk down the corner of a street. Imagine you are the CEO of India’s largest coffee chain. You have over 1,700 outlets across the country. You have built a loyal customer base, a strong brand image, and a profitable business. But then, debt piles up slowly, your lenders turn hostile, and your competitors eat into your market share. And you’re left with no other option but maybe end things.
How does a company cope with such a crisis? We have just the story that you’d love to read.
1992
Amalgamated Bean Coffee Trading Company
From investing heavily in the stock market to an early career in J M Financial, where V.G. Siddhartha managed portfolios for two years before setting up Sivan Securities, which later became Way2Wealth.
By 1985, he was a full-time investor who owned 10,000 acres of coffee farms. That was how Amalgamated Bean Coffee Trading Company was born.
1992
The Beginning of a Dream… CCD
Within two years of its inception, Amalgamated Bean Company emerged as India’s premier coffee exporter.
Inspired by the Tchibo espresso brand in Germany, V.G. Siddhartha dreamt of sharing the rich flavors of coffee with people in India. He wanted to build an empire that created a captivating coffee journey for people.
That’s how Amalgamated Bean Company (ABC) became the foundation for Coffee Day Global.
1996
The Rise of Café Coffee Day
The farm-to-cup company opened doors to its first cafe on Brigade Road, Bangalore. This hangout spot caught the fancy of the youth in Bangalore, quickly becoming the place for conversations and more over a cuppa joe.
2011 -2016
Cafe Coffee Day Expansion
The cafe culture of the West caught on in India, and V. G. Siddhartha’s dream found the demand to expand to 2000 cafés by 2016 with a presence in Austria, Egypt, Malaysia, Nepal, and the Czech Republic becoming a $1 billion company one cup at a time.
2017
Icon For Innovation & Excellence
The Coffee Day brand flourished, becoming more than just a name associated with coffee with red branding. It symbolized innovation, diversity, and Siddhartha’s unrelenting pursuit of excellence across various industries, from owning the crops and producing the coffee, espresso machines, and furniture for the outlets and Coffee Day Resorts.
2017-2019
A Prospering Dream
The Coffee Day Enterprises owned around 1,700 cafes, more than 48,000 vending machines, 532 kiosks, and more than 403 locations where ground coffee was sold. A Moneycontrol report from 2019 reported that Coffee Day Enterprises had a yearly revenue of Rs 4,264 crore.
2019
Café Coffee Day Rising Debts…
Café Coffee Day had a total debt of almost Rs 6,574 crore 2019. Adding to its woes was the 10% fall in coffee exports in India, which led to a drop in coffee prices for the first time in 13 years. Meanwhile, the company’s revenue plummeted by a distressing 28%.
2019
Attempts to Pay off Debts
V.G. Siddhartha decided to sell his 20.32% ownership in Mindtree, an IT services company, for over Rs 3,200 crore to pay off CCD’s debts.
Things worsened when CCD could not obtain the working capital to run the company. It prompted him to agree to sell the flagship brand CCD to Coca-Cola for an estimated Rs 10,000 crore while Blackstone was considering buying his stake in the realty firm Tanglin Developments for Rs. 2800 crores.
2019
Adding to V.G’s Woes
The Income Tax department raided 20 of Siddhartha’s properties and discovered nearly ₹650 crores in hidden income.
At the same time, his father slipped into a coma, and the short-term loan he needed to rescue CCD didn’t come through. This, perhaps, was Siddhartha’s last straw.
Siddhartha was reported missing on July 29, 2019, and was found dead two days later in the river.
2019
Grim Reality
He left a letter that revealed the grim reality of his business. He confessed to the financial abyss he had found himself in and the relentless pressure from lenders, investors, and tax authorities.
As the news of Siddhartha’s passing spread, CCD found itself in a more profound crisis. The company’s stock price crashed, and outlets, once buzzing with customers, faced protests and vandalism.
Creditors were demanding repayment while the board scrambled to find a successor.
2019
The Downward Spiral
The share prices took a beating after Siddhartha’s unfortunate passing, dropping from ₹193 to ₹122 in just two days.
The market capitalization plummeted nearly 50%. CDEL’s financials taking a hit wasn’t enough. Sical Logistics, a listed corporation, V.G. Siddhartha, had a 0.68% stake dropped by 20%.
2020
Malavika Hegde’s Turnaround
Many believed it was the end of the coffee saga Siddharata had begun. But the beans were still roasting — Malavika Hegde, Siddhartha’s wife and mother of his sons, had plans.
2020
A Lot Can Happen Over Coffee
In December 2020, Malavika Hegde took over as CEO of CDEL.
She wasted no time taking bold and decisive actions: Selling off the assets that were not core to CCD’s business, renegotiating the terms of the debt, and shutting down the ventures that were bleeding money.
But that’s not all!
2020
CCD’s New Avatar
Hegde knew that the heart of CCD was its cafés — had CCD begun to forget it?
Hedge set out to make those cafés even better. New products, exciting services, and rewards for loyal customers — ensuring something special brewed at every café.
Thanks to her tireless efforts, CCD’s debt fell drastically to manageable levels.
2020
Hegde’s Strategies
Malavika Hegde proved that every wave that falls rises eventually. Under Hegde’s leadership, CDEL reduced its debt by 75%. That, too, despite the ongoing Covid-19 pandemic.
She took expected and unexpected measures, creating history
2020
Unexpected Measures
First was shutting down underperforming shops and lackluster coffee vending machines and focusing on what truly mattered.
The objective was clear: channel all efforts into nurturing its beloved CCD café chain. It was just the beginning of the grand transformation.
Malavika realized that she needed to muster resources and strength. So, she sold their stake in Mindtree, an IT services subsidiary, and other non-core assets.
2021
Winds of Change
The Global Village Tech Park in Bengaluru found a new owner in the Blackstone Group. The profit from this sale helped to invigorate CDEL’s financial position.
Malavika went the extra mile, implementing cost-cutting measures. The goal was to ensure every resource aligned with CDEL’s grand strategy and renegotiate debt commitments to alleviate financial stress.
2022
An Improved Cafe Coffee Day
In this transformation journey, CDEL sought alliances and partnerships with companies like New World Hospitality from Hong Kong, envisioning a future where they could work together to run operations in India.
The grand finale to its strategic makeover, CDEL had a secret weapon — its vast coffee estates in Kodagu and Sakleshpur, sprawling over 20,000 acres.
These estates were not just estates; they produced the finest Arabica coffee beans. CDEL leveraged this valuable asset, borrowing against it to fuel its ambitious plans further.
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2023
The Scene Now
CCD has made its mark across the country again. It serves fresh cups of delicious coffee in over 500 locations nationally. Plus, it supplies people at workplaces with 36,000 coffee vending machines.
2023
Financial Numbers To Note
In 2019, CCD had a heavy debt load of ₹7,200 crores. But by 2023, they managed to trim this heavy debt by 95%!
In FY2022-23, its retail coffee division raked in ₹869 crores in revenue. What’s more, they grew — a whopping 75% year-on-year increase.
Let’s not forget CCD managed to shrink its losses to ₹68 crores, down from ₹112 crores the previous year.
2023
What’s Next
With such a dramatic reduction in debt, remarkable revenue growth, and a successful battle against losses, Malavika Hegde turned the tables.
But can this strategy survive the test of time? It remains to be seen.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.