(Jayachandran/Mint)
(Jayachandran/Mint)

Opinion | Failure must not hurt the spirit of enterprise

The tragic death of Café Coffee Day’s founder V.G. Siddhartha earlier this week has a wake-up question for a startup nation: Are we treating our entrepreneurs fairly?

The confirmation of Café Coffee Day (CCD) founder V.G. Siddhartha’s death has not just been met with disbelief and dismay around India, it has concentrated minds on an important question: Are we fair to our entrepreneurs? CCD is a big brand and Siddhartha’s untimely demise reflects poorly on the prevailing business atmosphere, replete with “pressures" mentioned in a letter to the board of CCD and its employees. This document, which has widely been taken as his suicide note, referred to an acute financial crisis, an inability to buy shares back from an unnamed private equity partner, the duress that creditors had imposed, and also “harassment" by income tax authorities. That such a burden of stress could push a prominent businessman to the brink is disquieting. Condolence messages apart, the empathy his circumstances have evoked from corporate India suggests a broad anxiety over the vilification and worse that faltering firms and their promoters are often put to by an insensitive financial system. Unsurprisingly, the “harassment" brings back memories of the Rajan Pillai case of the early 1990s, when another government was in power.

Biocon chairperson Kiran Mazumdar-Shaw told The Quint that many businesses complain of being labelled “money launderers the moment there is some financial stress". That people running their own companies are vulnerable to myriad strains is a point that can’t be overstated. “[E]ntrepreneurs must not allow business failure to destroy their self-esteem," tweeted industrialist Anand Mahindra. “That will bring about the death of entrepreneurship." Aarin Capital’s T.V. Mohandas Pai has called for a shift in popular perspective. “Society should change the way it treats entrepreneurs," and “they should not be called thieves, etc. (without proof or substantiation)". The details of CCD’s troubles that are available in the public domain are too sketchy for us to grasp the bleakness Siddhartha may have been staring at. The coffee chain’s parent firm, Coffee Day Enterprises Ltd, reportedly owed 6,500 crore to various entities, and the net proceeds from Siddhartha’s stake sale in Mindtree—which fetched a total of 3,200 crore—were insufficient; also, credit lines appear to have dried up. The tax authorities’ attachment of some assets on two occasions, it seems, worsened things for him. The tax department has defended itself, however, saying that its enforcement actions were taken in accordance with legal provisions. It said that Siddhartha had admitted an unaccounted income of 362.11 crore, which he later failed to disclose in a tax return statement, prompting it to attach the assets in the “interests of revenue".

In general, this is a country with such complex laws that it’s not uncommon for entrepreneurs to fall foul of some provision or the other—even unwittingly. Moreover, plenty of grey areas exist, especially on tax matters. Guilt in many cases is a matter of legal interpretation. Such nuances tend to be lost on the public at large, all the more so after the past few years’ uproar over black money and unpaid corporate loans. For the tax regime to be effective, India would do well to follow the due, and fair, process of law, especially when the offender is an entrepreneur. Our law enforcers and society will also have to re-examine their attitudes towards business. Siddhartha’s death could send out the wrong signal to budding Indian entrepreneurs, discouraging them from taking up new ventures. It’s up to all of us not to let that happen.

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