Bata India Limited is one of the most recognised names in the footwear industry. With five plants located at Batanagar (West Bengal), Faridabad (Haryana), Bangalore (Karnataka), Patna (Bihar) and Hosur (Tamil Nadu), the company manufactures 33 million pairs of shoes per year. It has an excellent distribution network of over 1500 retail stores and 27 wholesale depots providing the most convenient access to consumers and wholesale customers throughout India.
For more than two decades, though, Bata’s financial performance has been terrible — dwindling revenues and a loss every alternate quarter and every few years.
At Rs 141.26 crore (Rs 150.97 crore), net sales dropped by 6 per cent in the September quarter over the previous corresponding quarter while sequentially it was down by a massive 31 per cent.
Bata’s operational income has been consistently falling over the past three quarters. Sales growth averaged barely 1 per cent over the past 10 quarters. Operational cost at Rs 150.02 crore (Rs 152.59 crore) was 2 per cent below those a year ago and 25 per cent below the June quarter cost of Rs 199.84 crore. The sequential savings in costs came from an increase in closing stock and a 4 per cent reduction in the other expenditure despite raw material cost and staff cost having gone up by 13 per cent and 10 per cent respectively.
Declining revenues and no proportionate reduction in the costs have strained margins badly. Moreover rising competition from more spunky regional brands have hobbled this clueless multinational.
The consequence has been an operational loss of Rs 8.76 crore against Rs 1.62 crore it reported during the previos corresponding quarter and much below the profit of Rs 6 crore it earned during the preceding quarter.
Other income was Rs 5.80 crore (Rs 1.14 crore). This has been complemented by a falling interest cost which stood at Rs 1.92 crore (Rs 2.17 crore) down 12 per cent from the year ago period and 20 per cent down from the June quarter cost of Rs 2.39 crore.
Net loss was Rs 8.51 crore against Rs 4.45 crore during the same period last year and a profit of Rs 2.10 crore during the June quarter.
The stock currently trading at Rs 32.30 which is 42 times the December 2001 EPS of Re 0.77.