Can Malavika Hegde turn Cafe Coffee Day around?

V G Siddhartha's wife has the support of the employees, but the challenges ahead of her are tough.
Samreen Ahmad reports.

Coffee Day Enterprises, the homegrown conglomerate which is facing a financial crisis, has on-boarded a new CEO.

Malavika Hegde, company founder V G Siddhartha's low-profile wife, will be sitting at the helm of the Bengaluru-based enterprise, which does not come as a surprise to the employees.

"Everybody expected her to take a more active role at office," said an employee on condition of anonymity.

But the journey is going to be full of challenges for Hegde, who was till now a non-executive director at the company.

While the company has already paid off a part of the debt by selling its non-core assets, it is going to be a tough task for her to rebuild the company.

"It is never easy for anybody to rebuild a company which has emerged from such a traumatic experience. For any CEO, whether it's from the family or from outside, it will be a daunting challenge," says Bengaluru-based businessman and Rajya Sabha MP Rajeev Chandrasekhar.

Hegde has taken over as CEO of the holding company almost one-and-a-half years after her husband V G Siddhartha -- who founded the country's largest coffee chain, Cafe Coffee Day -- allegedly took his life after mounting pressure from debtors.

Former Karnataka chief minister S M Krishna's daughter, Hegde has grown up in a political family and has seen the ups and down of life closely.

"She's a smart person who may not have had the opportunity to run a business so far. But let us not forget that she was the supportive spouse who witnessed her husband build his empire in front of her eyes over the past several years," says a family friend on condition of anonymity.

Hegde completed her education in Bengaluru and later married Siddhartha, who went on to be one of the biggest success stories of the Indian entrepreneurial ecosystem before meeting a tragic end.

At the organisation level, employees and people in the ecosystem have tremendous loyalty towards the late Siddhartha.

Hence, everyone would be committed to making it a success and helping her turn things around.

"She has people in the top management team who are very experienced and will support and guide her. She will be able to do well because everyone will be fiercely loyal and wish her to succeed," says former Rajya Sabha member Rajeev Gowda, who describes Hegde as an unassuming and grounded person.

As of March this year, the enterprise paid Rs 1,644 crore to its lenders, which reduced the company's debt to Rs 3,200 crore from Rs 4,900 crore earlier.

This amount was part of a payment it received from US private equity giant Blackstone, as part of its acquisition of the Global Village Tech Park in Bengaluru.

The company had earlier sold stake in IT firm Mindtree to help pare its debt.

It also entered into a share purchase agreement with Shriram Credit Company last month as a part of which the latter would acquire an 85.53 per cent stake in its subsidiary, Way2Wealth Securities, at an enterprise valuation of Rs 65.07 crore.

According to reports, the Tata Group had offered to buy the company's beverage vending machine business, but it has hit a roadblock as two lenders, YES Bank and Rabobank, are seeking to get their dues cleared first.

Feature Presentation: Rajesh Alva/Rediff.com