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What Went Wrong with ‘Bombay Dyeing’

CASE STUDY, MARKETING MANAGEMENT, FINANCIAL MANAGEMENT
ET Cases, 9 Pages
AUTHOR(S) : Dr. Sarika R. Lohana - UGC, Dr. Radhakrishnan Postdoctoral - SRTMU, Nanded and and Dr. Tripti Sahu - IIMS, Pune

Case Preview

What Went Wrong with ‘Bombay Dyeing’

 

It is very fundamental to any business to keep updating the business strategies and plans to suit the changing business scenario. In the modern marketplace, there is no mercy for the mediocre. The rule applies to all the sectors of Indian economy, be it a small scale industry or a big contributor to the GDP like textile industry which is the second largest in the world after China. The giant of textile world Bombay Dyeing also falls prey of market cruelty and suffered huge losses in the process. The company started with big dreams of earning huge profits and also does so, but later with the passage of time took the decision of expanding its business and tried its luck in other sectors like polyester yarns and real estate. Slowly the company’s business started to incur losses in the textile area and losses piled up contributing to the worries of the owners, Wadias. They planned to revamp their business strategies to regain the market share in 2017.

About The Company

The Bombay Dyeing & Mfg. Co. Ltd. (Bombay Dyeing) was registered in the year 1879. The primary business of Bombay Dyeing was textile production The company was founded by Nawrosjee Wadia as a small scale industry producing cotton yarn spun and dying in limited colors (thus it was named as dying industry). With the hard work and commitment of the founder his team, the company never looked back and soon Bombay dyeing became one of the companies which defined textile industry in India during that era.............

Teaching Note Preview

What Went Wrong with ‘Bombay Dyeing’

 

Synopsis

During early 2017, Bombay Dyeing, the giant of textile in India was back in the news, but this time for all the wrong reasons. Bombay Dyeing registered huge losses consecutively for the third year in 2017. The company cancelled its lucrative deal of INR230 crore Further acted as a stimulator and resulted in decline of market capitalization of the company. The century old textile giant suffered huge losses in short span which led the company to close one of its manufacturing plants.

The company had three basic businesses, i.e. the oldest business of textile, the newly added polyester business and the only profit making business of the group, the real estate business. Because the real estate business was earning profit it was obvious for the company to pay more attention to its real estate business, which resulted in the neglect of other businesses.

The market of Bombay Dyeing was constantly going down and the management was working out the strategies for the revival of its brand image and to gain back the market share. Now the management is trying to take every possible step to hold its present market and strengthen its position. The case highlights the problems faced by Bombay dyeing textile business and the chaotic situation of the company.

Learning Objectives

• The present case portrays the picture of ups and downs of Bombay Dyeing (textile) in the last 3 financial years (2014-2016) which brought down the profits of the company. The case is designed to provide a platform for analysis in classroom teaching in Financial Management and financial sustainability measures.
• The case also touches a few aspects of branding strategies (which went wrong) of the textile company and triggers a discussion on to find out the actual reason behind the downfall and further corrective actions.
• The reason ranges from a few wrong decisions from time to time to no international expansion plans.

Case Positioning

This case can be used in the course PG level / MBA- II year students for Specialization Finance and Marketing strategy.

Assignment Questions

I. Analyze the case by using Financial Sustainability model i.e. Altamas Z Score model for 3 years (2014- 2016) and interpreted the same.
II. What happened with the 137 year old dyeing giant that it has to revive all its strategies to stand in the market again?
III.............

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Product code: FIN-1-0040, FIN-1-0040A

Abstract

Bombay Dyeing and Manufacturing hit the headlines early 2017 for the reason known to all. The Economic Times quoted that the group incurred a loss of INR85 crore in  the fiscal year 15-16. The story begins in the year 2014 when the company incurred 93%; net loss in the first quarter of 2014 as compared to the last quarter in the same year. Further with news of cancellation of deal worth INR230 crore. This resulted in a drastic decline in its market capitalization in the later quarters of the year. Since then the company has sunk into losses. What happened with the 137 year old dyeing giant that it has to revive all its strategies to stand in the market again, was the question. Presently the company is going for revamping all its management strategies to bring back the profits on track.

The company currently dealing in 3 segments, i.e. polyester, textile and with the only profit making segment of real estate, Bombay Dyeing’s Wadia’s group, which was once known for its textile business started to be known in the market for its real estate business. The reason ranges from a few wrong decisions from time to time to no international expansion plans.

The present case portrays the picture of ups and downs of Bombay Dyeing (textile) in the last 3 financial years which brought down the profits of the company and would provide a platform for analysis in classroom teaching in financial sustainability The case also touches a few aspects of strategic marketing decisions (which went  wrong) of the textile company to find out the real reason behind the downfall.

Pedagogical Objectives

  • To make students understand the importance of financial sustainability using Z score model
  • To make students undergo a critical analysis of the strategic marketing decisions and to realize the importance of taking strategically right decisions in the business
  • To make students identify innovative and competitive strategies in changing market scenario

Case Positioning and Setting

This case can be used in the course PG level / MBA- II year students for Specialization Finance and Marketing strategy.



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