Malavika Hegde was appointed as Café Coffee Day’s Chief Executive Officer as of December 7, 2020, for five years. The change in leadership comes at a time when the Bengaluru-based firm has seen a sharp decline in its fortunes.
Started by VG Siddhartha, Malavika’s husband, Café Coffee Day (CCD) was the de facto coffee server for the country’s youth during the 1990s and 2000s before some of the world’s popular coffee chains such as Starbucks, Costa Coffee and The Coffee Bean set up shop in India. The rise of CCD began with a single café in Bengaluru in 1996. It now has around 1,752 cafes, spread across 243 cities. The CCD chain became popular as it served as an affordable neighbourhood “hang out” joint.
However, after two decades of consistently expanding the franchise, in a letter he had reportedly sent to board members and employees, Siddhartha called himself a failed entrepreneur. The Mangaluru police found his body on the banks of the Netravati River on July 31, 2019. According to the letter, Siddhartha faced pressure from his private equity partners and other lenders, as well as harassment from the income tax department. The news of his death drove the company into uncertain waters as shares for the Coffee Day Enterprises Ltd (CDEL) crashed with the news of his death. Trading was suspended from February 3, 2020.
An investigation into the circumstances that led to Siddhartha’s alleged suicide revealed that a large amount of money was siphoned off from the company. According to a probe report, Siddhartha seems to have transferred large portions of money from CCD books to a company that he held privately. The report went on to reveal that Mysore Amalgamated Coffee Estates Limited, a private enterprise owned by Siddhartha and his father, owed a large sum to the Coffee Day Enterprise subsidiaries.
In a letter to the company’s staff, hours after the announcement of the probe, Malavika said that she is committed to the future of CCD. “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 said.
Malavika told employees at the time that she is fully aware of the requirements and responsibilities with regards to transactions between Siddhartha’s publicly listed companies and his private entities that the report highlighted, and that she will fully cooperate with the Board and the concerned Authorities for a corrective course of action.
Malavika is also fighting a cheque bounce case where a non-bailable warrant was issued against her by a magistrate court in Karnataka’s Mudigere on November 4 in connection with the case. This was after coffee cultivator K Nandish approached the Joint Magistrate First Class with a plea to arrest the accused, alleging that Coffee Day issued cheques to Nandish twice, which bounced on both occasions.
The CDEL group has been paring its debt through the sale of non-core assets. CDEL has sold its stake in IT firm Mindtree to L&T Infotech and had announced its sale of its Global Village Tech Park in Bengaluru to global investment firm Blackstone last year. Around 280 CCD outlets were shut in the current fiscal year.
Malavika, who has a bachelor’s degree in Engineering from the University of Bengaluru, will operate from Bengaluru CDEL headquarters. The company’s board approved the appointment of CH Vasudhara Devi, Mohan Raghavendra Kondi, and Giri Devanur as independent directors.
The daughter of senior BJP leader and former External Affairs Minister SM Krishna, Malavika was serving as the Director of the company before being appointed CEO.
