The suicide of V G Siddhartha, The Cafe Coffee Day founder has been, unfortunately, used as a stick to beat the Central Government, who has been ruthlessly hunting down tax evaders.
The murky dealings that led to VGS's suicide clearly indicates that, though he was an entrepreneur with vision, his Business Model was akin to a Ponzi scheme. Borrow to fund unsustainable growth, borrow more to manage the debt, and borrow yet more at high interest rates to service the previous debts. Throw in shady money from Politicians and Private Investors, the picture is complete.
VGS owned assets worth thousands of crores. His share in MINDTREE, a software company, was sold recently to L&T for Rs 3200 crores, and his CCD franchisee model of Business can never lose money. In fact Cafe Coffee Day balance sheet indicate it has been making profits.
So how did he pile up the Rs 7,000 crore debt?
Did he borrow money (or laundered money) from Indian Politicians (Black Money) and Private Investors to fund his hundreds of Hectares of Farm Land in South America? Did it not generate enough revenues to pay off his debt?
Where the Private Investors or Politicians involved tighten the noose around his neck to do a hostile take over?
The Tax Raids were in 2017 and unearthed massive tax evasion.
If you evade taxes, you have to face the consequences.
I hear many businessmen crying hoarse that it was Tax Terrorism that led to VGS' suicide and want Government to go easy on the errant Businessmen, giving the laughable reason that Economy needs a revival and hence Tax Evading, Crooked Businessmen should be allowed to operate freely, violating the law, so that they will pump in more Black Money into the Economy. This was the model followed by UPA under Chidambaram, as FM. And we know where it took the Country to.
Long and short of it is that VGS was a visionary entrepreneur, created jobs to thousands, but he had very poor Business Ethics, had shady characters as Business Partners, and borrowed heavily violating basic Debt:Equity laws, got himself neck deep in debt, evaded taxes, indulged in money laundering and took his own life.
Let us not cry crocodile tears over his death, and use it as a stick to beat the Government that is trying to bring the Jungle Raj of Business World to follow the law.
VGS did not follow his karma dharmam, and paid for it when it bit back.
