She was a good actress but she just didn't fit the mold of a Bollywood actress. Sadly, in order to be successful in Bollywood, you need to be glamorous, modern and stylish and Gracy was none of these. She was not sexy or chique, and clearly, that's the most important criteria for an actress these days. If you can't make men go gaga over you and do song and dance numbers in scantily clad clothes, there is little chance of success as an actress in Bollywood.
But apart from that, Gracy made some terrible choices after Lagaan.