Bata India - A much better show in the second innings

 



For a very long time, Bata had dominated the Indian footwear market which made it a household name and a prized possession. It was so dominant that the company became complacent and stopped innovating. It was stuck with age old product designs because of which the market share started dropping as newer local players entered the market with cheaper and trendy products. Bata reported a net loss of Rs. 4.45 crore in the third quarter of 2001. It continued to report losses till 2004.1 The company was also struggling with unionization of workers both in the factories and at the stores.

It required a new management team, significant amount of time, and change in strategy to turnaround Bata. Bata has leveraged its brand name to overcome the odds. It has since then introduced a better product mix to cater to the changing consumer demand.

A very able management team

Bata is led by Mr. Uday Khanna (Chairman and Independent Director), Mr. Rajeev Gopalakrishnan (Managing Director) and MR. Sandeep Kataria (Whole-Time Director AND Chief Executive Officer). Bata Management The management has worked very hard in the last few years to make the company more competitive and profitable. Bata India had become a zero-debt company by CY2011. The company has consistently increased the dividend(%).

Shareholding pattern

Bata Shareholding

The promoter, Bata(BN) B.V., holds 52.96% of the outstanding shares. Mutual Funds hold 16.86% of shares. Bata(BN) B.V. is a Amsterdam based holding company under Bata Ltd.

Bata financial performance since 2008

Revenue has been increasing consistently over the years, but the profit and margins have been inconsistent over the same period. Still, the company has managed to retain Net Profit Margin (NPM) of little less than 10%. This year (FY18-19) NPM is expected to cross the 10% mark by a fair margin. The company did quite well in Q3FY19 and it shows that the Indian consumer had opted for a Bata product during the festival season.

Bata Key Indicators

Bata Key Indicators

Striving for growth and profitability

The list of new hirees2 (in the top and middle management positions) shows that the company is focusing on four key aspects:

  • Innovation
  • Online retailing
  • Marketing
  • Human Resource
The company has acknowledged that online shopping is catching up in a big way. The company has thus enhanced its own website for online retailing and it is also selling produucts through popular online shopping platforms. Bata India is also introducing new products and designs more frequently to cater meet consumer demand. The management has put more focus on expanding and strengthening its distribution channel. The management has also worked harmoniously (includes execution of Long Term Agreement for settlement of dues) with the workers' union.3 The company has also tied up with youth icons to promote its products. The company has Pan-India presense with over 1.375 stores and it is opening many new stores or upgrading existing stores every year.

Bata Brands

References

  1. Business Standard article, 40 Years Ago...and now: How Bata put its foot down
  2. Bata India annual report, FY2017-18
  3. Bata India annual report, FY2017-18

 

 

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