Calcutta, April 27: After a gap of almost three years, Bata India is back in the black with a net profit of Rs 50 lakh in the first quarter (January-March) of this year compared with a loss of Rs 14.66 crore in the corresponding period in the previous year.
Bata India, the 51 per cent subsidiary of Bata Shoe Organisation of Canada, had set a target of returning to the profit regime in 2005 following a series of restructuring exercises. Market analysts feel that the first-quarter results are an indicator that the company may turn around this year.
The market welcomed the results and Bata India shares zoomed to touch an intra-day high of Rs 94.85. The stock closed at Rs 88.55 on the National Stock Exchange. In fact, investors were interested in the shares since 2004-end on an expectation of a turnaround.
Bata India has registered a net sales of Rs 167.49 crore against Rs 162.86 crore in the previous year. The staff cost of the company has declined to Rs 44.02 crore from Rs 47.31 crore in the previous year.
The interest outgo of the company has increased marginally to Rs 2.56 crore from Rs 1.97 crore. This is because the company has to take loans from State Bank of India to pay off the employees who have opted for the VRS.
The company has undertaken a restructuring exercise that includes a voluntary retirement scheme and a foray into real estate business by using its land in Batanagar.
Officials said the massive restructuring exercise will reap benefits for the company in the coming months. They said with organised retailing gaining momentum in the country, Bata is in a comfortable position to leverage on the opportunities with its strong retail chain network.
The company is jointly developing its surplus land at Batanagar into a self-sustaining township, which is also expected to save maintenance costs and generate cash flow.
The realignment of the company?s retail stores in different segments has also led to increased sales. The company has divided the retail stores into flagship, family and bazaar to offer customised products.
