Celebrity Fashions Limited (A)

V.G.   Narayanan; Tanvi   Deshpande; Shreya  Ramachandran

Case | HBS Case Collection | November 2019

Celebrity Fashions Limited (A)

by V.G. Narayanan, Tanvi Deshpande and Shreya Ramachandran

Abstract

In May 2017 in Chennai, India, the chairman of Celebrity Fashions doubted whether the company could last until the end of the year. Venkatesh Rajagopal had found that the company, a readymade garment manufacturing and exporter he founded in 1989, was having a hard time financially. It had been dealing with declining revenues for the past five years, and its losses had tripled between 2014 and 2016. A slowdown in factory plant processes in 2006 and the value of the rupee against the dollar, as well as wage arrears, contributed to the financial problem. Rajagopal’s son, Vidyuth, had recently joined the company after moving roles both within Celebrity and its sister company, Indian Terrain, and organizations elsewhere. In 2017, as joint managing director, he was convinced he would be able to turn the company around. Vidyuth, along with the independent director Venky appointed, identified the problems. There were communication gaps on the factory floor, and this caused lags in the shipments of garments and pushed up costs of production. The financial problems had confused some employees, and others were not aware of them at all. The leadership team was not communicating effectively. Would Celebrity be able to cut operational costs, and would Vidyuth be able to get the buy-in from his team to transform the company and protect his family business?

Keywords: turnarounds; Operations; Management; Financial Condition; Problems and Challenges; Communication; Organizational Change and Adaptation; Transformation; Apparel and Accessories Industry; Manufacturing Industry;