INTRODUCTION

There are two kinds of businessmen in India. There are those who succeed. People like

N R Narayanamurthy or Azim Premji who are admired not only for their achievements

but also for the way they do business.

Then we have those who tried but failed. People who took all the right steps, showed

the right amount of dedication, who tried very hard but did not succeed in what they set

out to do. Business is, after all, not just hard work and dedication. There is a factor of

luck and uncertainty, of circumstances conspiring to fail the finest among us. One such

venture is Amitabh Bachchan Corporation Ltd.

About Amitabh Bachchan Corporation Ltd. (A.B.C.L.)

The company was formerly known as Amitabh Bachchan Corporation, Ltd. (ABCL) but

changed its name to AB Corporation, Ltd. (AB Corp.Ltd.) in November 2003. Key

people involved with the company are Amitabh Bachchan, Jaya Bachchan, Abhishek

Bachchan and Aishwarya Rai Bachchan. Mr.Pulapaka Ramesh is serving the company

as its CEO and President whereas Mr. Rajesh Yadav is working in the company as

Chief Financial Officer.

Bachchan setup Amitabh Bachchan Corporation, Ltd. (A.B.C.L.) in 1996 during his

temporary retirement period with the vision of becoming a 10 billion (approx 250 million

$US) India's premier entertainment company by the year 2000. ABCL's strategy was to

introduce products and services covering the entire gamut of the India's entertainment

industry. It's operations were mainstream commercial film production and

distribution, audio cassettes and video discs, production and marketing of

television software, celebrity and event management.

The first movie produced under the banner of Amitabh Bachchan Corporation Ltd. was

BOMBAY (1995). Soon after the company was launched in 1996, the first film produced

by the company was Tere Mere Sapne which was a modest success at the box office.

ABCL produced a few other films none of which did well.

FAILURE

He hired the best professionals and picked up a few neat properties on Doordarshan,

launched a couple of movies, bought a few music rights, entered talent management,

acquired the Miss World pageant, and suddenly, right in the midst of all this, found the

company short of cash.

It had liabilities of Rs 70.82 crore against assets of Rs 60.52 crore on September

30, 1998. In January 1996, the ABCL approached the Canara Bank for credit facilities

totalling Rs 14 crore. The company also got credit worth Rs 8 crore from the Allahabad

Bank which joined the consortium in May that year. The credits to the ABCL were

backed by two sets of safety instruments: two flats in Juhu -- valued at Rs 40 lakh each

-- current assets and receivables including raw stock. Bachchan also executed a

personal guarantee stating his net worth (as of March '94) at Rs 63.98 lakh and net

annual income at Rs 34.52 lakh. He listed his assets at Rs 64.90 lakh (movable) and

Pratiksha at Rs 8.06 lakh. In effect Bachchan, his wife Jaya and their investment outfit

Tansy Investments guaranteed amounts advanced to the tune of Rs 17.5 crore along

with interest and costs. Subsequently, ABCL officials deposited the title deeds of the

two flats and also signed a memorandum recording the deposit of title deeds promising

to create a security (a set of papers hypothecating property of said value) of fixed

assets as equitable mortgage for the value of Rs 10 crore.

The company was said to owe about Rs 17 crore to Doordarshan (DD), a fair amount to

NDTV, and some of its cheques to other companies bounced.

REASONS FOR FAILURE

It was an idea somewhat premature and Amitabh Bachchan did not have the nerves

to hang in there. It was not his fault. The media was, as always, mean to him and had

written the company's obit long before the shutters were actually downed.

The business was plagued by financial difficulties. The main reason for the bad

performance of ABCL was blamed on the gross mis-management of the company by

the then CEO, Sanjiv Gupta , who went on to become the CEO of Coca Cola India.

Any other company would have possibly survived and come back from the edge. But

ABCL was too much in the limelight. Its every move was being reported in the

headlines. No wonder the investors got nervous, creditors started filing cases, the

bankers pulled the plug.

The pace of growth may have been too eager.

Cash planning was possibly poor.

Implementation, flawed.

Miss World Pageant

The company burst into the limelight in 1996 when it was responsible for

bringing to India the Miss World Pageant, but was then mired with controversy when the

company was not able to pay its dues.

The corporation's decision to host the Miss World competition in Bangalore evoked two

kinds of protests.

At one level, objections have been raised by feminists on the

familiar grounds that beauty contests degrade women. But at another level, there are

also allegations that a contest of this nature goes against the traditions of Indian culture.

Some of the protestors have argued that the decision to hold Miss World in India is part

of larger sell-out to multinationals and foreign influences.

The need was to get active government participation and to sell India as a tourist

destination irrespective of the fact that Bangalore was hosting the event. It doesn't seem

as though they managed that," opines Pradeep Guha, executive director, Bennett and

Coleman.

Government support was garnered but what nobody really expected was the littering of

the landscape with protests, threats of immolations, burnt effigies and parallel pageants.

Now with the possibility of dwindling profits, patience has begun wearing thin.

REVIVAL

The company was launched again by Amitabh Bachchan in 2001 as A B Corp. The

company then went on to produce hit films such as Paa in 2009 Directed by R Bali and

Viruddh. The company has also signed a deal with Reliance BIG Entertainment.

Aishwarya Rai the New Head of ABCL

Aishwarya Rai Bachchan, the daughter in-law of Bachchan family has taken up

the responsibility to revive the destiny of the family banner. So, to continue with some

good projects they have chosen Aishwarya to head the banner for the re-

establishment.Aishwarya has played a pivotal role in planning the marketing strategies

of the current film Paa under ABCL.

LEARNINGS

The most common causes of business failure are:

Laying more emphasis on product, rather than market and marketing

The requirement to identify a market for your idea or the product is more important

than the product itself. You may have a great idea or a product, but if there are no

buyers for the same then it cannot be a success. Smart businesses first identify the

market requirement and then develop products accordingly.

In the case of ABCL, their initial movies were not promoted well which led to

consecutive failures.

Laying more emphasis on company image.

To project a high profile image for the company by hiring expensive office space and

a fancy logo and website will not do much to facilitate in the success of your business.

In fact high overheads, because of expensive space and website maintenance costs,

can drive you out of business very fast, because the golden rule for the success of any

business is to keep overheads low especially at the start up time.

The top level executives of ABCL were highly paid.

Attempting to have a very complex business model

Simpler the business model, better it is. In a simple and uncomplicated business

model everybody, including your vendors, suppliers, employees, and customers are well

aware of their responsibilities and goals.

ABCL’s operations were mainstream commercial film production and

distribution, audio cassettes and video discs, production and marketing of

television software, celebrity and event management which could not be handled

properly.

Attempting to pioneer a new product or industry

Many businesses get into the vicious cycle of trying to pioneer a new product or

industry- many a times the whole exercise can drain you and your business completely,

without much success. Very few and limited entrepreneurs succeed in radically new

businesses. Even customers at times are scared off because of a totally new concept or

product; hence chances of success are not assured, despite all the efforts that you may

apply.

ABCL brought to India the Miss World Pageant, which was mired with

controversy.

Getting involved in a business lawsuit and bankruptcy

Business lawsuits that are not in your favor can take away all your assets, including

your personal assets like home, property, savings etc and make you and your business

bankrupt.

ABCL had liabilities of Rs 70.82 crore against assets of Rs 60.52 crore on

September 30, 1998. In January 1996, the ABCL approached the Canara Bank for

credit facilities totalling Rs 14 crore which it was unable to pay back.