BARC 521

REPORT ELECTIVES
RIYA YOGESH PATIL
SOLUTIONS SUGGESTIONS
ROLL NO. 20 SEM – 5
DATE: 05-07-2021
VIVA SCHOOL OF ARCHITECURE
ACADEMIC YEAR 2021- 22
BARC 521 ELECTIVES DATE: 05-07-2021

REPORT ON SOLUTIONS

DOWNFALL OF CCD:
37 Years of hard work, 25000Crore Net worth, valuation of 8000crore also being largest coffee
brand in India, still CCD had debt of 6000crores. To expand their business CCD opened 17500 outlets in
more than 200 cities which was one of the major reasons of the downfall. As he opened 8-10 outlets
close to each other out of which only one outlet had the maximum consumers and so this caused
operational expense including outlet rent, electricity bill, staff salary, wastage of food, display food
wastage to remaining outlets due to which many outlets were shut downed. Although it had majority
of crowd, the premium product were never sold as many of them would order a cup of coffee and sit
there of hours using Wi-Fi facility. Though it looked crowded, but the profit margin was low. Due to
improper expense management and improper planning CCD faced huge expenses and to overcome
these expenses they started taking loans. And to repay these loans instead of paying it from their
business income they took more loans to repay the prior loans. There was no proper management of
how should the debt be repaid. And the income from the business was invested in other Real Estate
Assets instead of repaying debts. At the same time Siddhartha (Chairman of CCD) was raided by
income tax due to many illegal assets. As Siddhartha was unable to repay the debts, he was missing for
days and then committed suicide. The problem here was there was massive attention to the
geographical margin but the gross margin was neglected which caused downfall of CCD. CCD has closed
around 280 outlets in the first quarter of the current fiscal year due to profitability issues and expected
increase in future expenses.

RIYA YOGESH PATIL – 20 VIVA SCHOOL OF ARCHITECTURE PAGE NO.:1

BARC 521 ELECTIVES DATE: 05-07-2021

SOLUTIONS:

 Paying more attention towards the profit margin and not just expanding geographically.
 Adding variety of menu to reduce food fatigue.
 Avoiding funding. Start slow, initially growth rate of company would be slow but one won’t end up
in huge debts.
 They could have used their own cash (savings). Even when the business turned to be profitable,
they could have preferred to continue bootstrapping. Reinvest the amount that you earn rather
than procuring outside funds. These investments may look small but the company stay secured.
 Keeping regular track of loans taken and repaying it as soon as possible.
 Timely payment not only reduces the debt but also saves late payment penalties and also avoids
extra interest.
 Listing various debts with their EMI’s, Interest rates, taxes and tenures; this would help in
determining the most urgent and costliest loan and then repaying them.
 Most importantly creating plan for prepayment.
 Budgeting is vital management technique in marketing. This will help in reducing daily expenditure
and the money would be saved on daily bases to clear the debt.
 Concluding to solution, according to me it is very important to believe that there is a way out of
any kind of debts situation, it will surely take some time but if we create a plan and stick to it, the
debts would be repaid successfully. Thing what Sidshartha did was wrong, running away from
debts or taking one’s own life on purpose is not an option for such an situation. Thought their
marketing strategies were admired but they faced downfall due to debts, improper planning,
budgeting and managing.

RIYA YOGESH PATIL – 20 VIVA SCHOOL OF ARCHITECTURE PAGE NO.:2