Malavika Hegde: Once a Grieving Wife, The CEO of CCD Brings Debt of 7200 Cr Down To 1731 Cr

“Somewhere along the way in the last 12 months, my mission has been to uphold the proud legacy of Siddhartha. He has left me a job to do, to settle every lender to the best of my ability, to grow the business and to enthuse and foster our employees.”

Many of us would remember the shocking news of 2019 when VG Siddhartha, CEO of India’s most famous coffeehouse chain, cafe coffee day, committed suicide. Malavika Hegde, the wife of the famous entrepreneur, took over the reins in December 2020. Malavika Hegde’s father was SM Krishna, former Chief Minister of Karnataka and former Central Minister of External Affairs. As a phoenix burns and rises from its ashes, so has the CCD under her leadership bringing the humongous debt of 7200 Crore down to 1731Cr in a short span of 2 years.

Once in shadows, now a lifeline of CCD

It was soon after the unfortunate demise of CDEL founder that the problems faced by the retail coffee chain came into the limelight.

Malavika didn't just have to face the personal loss, but the typewritten note found after Siddhartha's death revealed how much he was under debt. In his note, he seemed to apologize for "failing to create the right profitable business model." as he was under pressure from private equity partners and other lenders, and faced harassment from the income tax department.

Cafe Coffee Day Founder V.G. Siddhartha's suicide note

It was at that moment when Malavika Hegde decided to take over as the Chief Executive Officer (CEO) of CDEL and bring her husband's dreams into reality.

Welcomed by 7000 Cr CCD Debt

As of March 31, 2019, CDEL was in debt to the tune of Rs 7,200 crore. No doubt, Malavika Hegde had a significant amount of cafe coffee day debt to pay off. Instead of avoiding her troubles, Malavika Hegde, a shattered lady, resolved to face them head-on. An engineer by background and a mother of two, Malavika had earlier served as a non-board member of CDEL for many years. But she knew, it is only her who can keep her husband’s vision intact.

Malavika Hegde and V.G. Siddhartha

A series of challenges

Malavika Hegde had several difficulties in her role as CEO of CCD.

• In order to preserve her late husband's goal, she had to lower the company's debt.
• Thousands of people's jobs were on the line, and she had to keep the firm viable.
• CCD had to fight against its rising competitors like Starbucks and Barista, who had already hit its customer footfall even before the missing of its former CEO.

The miraculous recovery of CCD

Hegde has not only shown her bravery but has also demonstrated her ability and competence as CCD's CEO. Malavika hedge in an interview with Times of India said that she was dedicated to the company's future and ensured that the Coffee Day tale was “worth preserving”. Her letter came hours after a probe revealed that a private entity owned by late founder Siddhartha owed Rs 2,693 crore to the listed entity, Coffee Day Enterprises Limited (CDEL). “We will work to reduce the debt to a manageable level by selling a few more investments as I am committed to the company’s future,” she wrote.

(While there was a debt of 2603 Crore on CCD, the total debt stood at Coffee Day Enterprises Limited (CDEL), the parent company of CCD, which stood at 7200 Crore as of March 2019.)

As per CDEL's statement in August last year, the management was working hard to get the firm back on track after "substantial" debt reductions. It had mentioned in its annual report that its net debt was Rs 1,731 crore as of March 31, 2021. The report read, “The total loan funds stood at Rs 1,779 crore which comprises of long-term borrowings of Rs 1,263 crore and short-term borrowings of Rs 516 crore.” 

CCD’s COVID Comeback

The tyranny of COVID-19 brought many businesses in India to their knees. But CCD maintained its growth even during the pandemic. The company-built relations with many new investors to infuse capital into their business. It took leverage of its existing brand image in India. With this image, the company was able to convince the investors that the brand of CCD was worth preserving.

Various measures were implemented taking into consideration the COVID safety protocols across the entire chain of cafes. This helped to bring the customers, who have always found a place for CCD in their hearts, back to the cafes.

What lies in the future for CCD?

Cafe Coffee Day and its new CEO's success has given many people optimism that VG Siddhartha's tremendous legacy would not be wasted.

Whether Malavika Hegde can continue to do miracles for CCD in the new year remains to be seen. If one follows the current trends, it is clear that the new CEO will be able to maintain the brand name in the Indian markets with her energetic leadership.

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