Case Study on Sula Vineyards

#Week 1

CASE STUDY ON SULA VINEYARDS

Kismat Prajapati

International American University

BUS 590: Business Strategy

Submitted to: Prof. Sushil Raj Kumar Sharma

July 06, 2015

Abstract

Rajeev Samant, a graduate from California, being a straight forward and extrovert person decided to open a business of his own to create an employment opportunity on his mother land. He was not satisfied with the job which he has been doing during those days. And with the decision of Indian to decrease the trade barriers with the rest of the world in 1992, it has motivated him to start a business on his own and leaving the job currently he has been engaged to.

With this all, the company names Sula Vineyards is established. This case focuses on the ups and downs of the company Sula Vineyards, and the strategies that have been formulated and planned to run the business during its operation.

He had made a decision to follow the path of Entrepreneurship, but it was difficult to establish a business where there is lots of bureaucracy, and lots of hidden cost. He also felt the need of expertise on the field for the better production and went back to Northern California in search of expertise. Ultimately, the less experienced on the wine business, let him to have a partnership with Kerry Damskey.  

He was running business on his own, accelerating the current operation with the debt and private equity from family, friends and bank loan. But with the increased business, and demand, he has made a decision of issuing optionally convertible preferable shares.          

With the vision of increasing business, in 2005, Rajeev sold 33% of his share of winery operation to GEM India Advisors, which took place on the board room and also brought in financial resources and expertise to the company.

Henceforth, the case is all about his success and the challenges faced by Mr. Samant along with the key factors that made him success on his product line and the company’s successful operation.

Analysis of Case

 With the decision of starting wine business on his own Native Land, with the all energies and facing all those problems, he analyzed the environment for the business and operated Sula Vineyard wine Industry. For his business, he has been financed by his friends and family and he also collected bank loan along with the internally generated cash flows. As the business was extremely cash-intensive industry, he was in need of external financing. But Rajeev was afraid of the further debt as the increased financial debt may affect the financial position of the company. And this may also decrease his share ownership and possibly the control over the company. There has been a negative cash flow from the operation cause by the inventories as the sale of inventory in the organization was time consuming. And the most biggest problem faced by the company was to grow the market for Sula Vineyard and to compete with the existing and expensive brand of French Wines in India.