Bata is one of the largest Retailers and Leading manufacturer of footwear in India, established in 1931 as Bata Shoe Company Private Limited.
(A) About The Company
- The Company is a part of the Bata Shoe Organization, a multinational Footwear and Fashion Accessories manufacturer and retailer.
- The Company went public in 1973 when it changed its name to Bata India Limited.
- Today, Bata India has established itself as India’s largest footwear retailer and has a strong pan-India retail presence.
- Moreover, It is one of the Top 10 Footwear Companies in India.
Quick links. Click to navigate directly to the paragraph in detail:
- Executive Management of Bata India
- Shareholding Pattern
- Revenue Classification & segments
- Key operational parameters
- Key expenses – R&D, Raw material & advertisement
- Bata India Distribution Network & Market share
- Financial Performance highlights
- Management Outlook
- Growth Opportunities & Risks/Concerns
(B) Executive Management
(i) Mr. Ashwani Windlass (Chairman and Independent Director)
Mr. Ashwani Windlass is the current Chairman of Bata India. He is an An MBA from FMS, Delhi University, also holds B.Com with a gold medal and a post-graduation in Journalism (B.J.) from Punjab University, Chandigarh.
Mr. Ashwani Windlass has over four decades of top management stints with first-hand experience in both traditional and new age technology companies and an exceptional track record of value creation. He now mentors top CEOs/Boards. Mr. Ashwani is also on Boards of several leading companies including Hitachi MGRM Net Limited, Vodafone Idea Limited, Hindustan Media Ventures Limited and Jubilant Foodworks Limited. He served also on Boards of Max India Limited/Max Financial Services Limited for over 25 years.
Since 2008, he has been Chairman – SA & JVs, MGRM Inc., USA, a global research initiative on human life cycle-based services. He also established and managed over a dozen new ventures with world’s leading corporations – Hutchison Group, Hong Kong, British Telecom UK, Comsat Corporation, USA, Avnet, USA and Royal DSM, Holland Total Group, France, Hitachi Limited, Japan among others.
He has been the Founder Managing Director of Hutchison Max Telecom (later rechristened Vodafone India Limited) and Vice Chairman & Managing Director of Reliance Telecom Limited & Executive Chairman MGRM.
Age of Mr. Windlass is 65 years. In the F.Y. 2020-21, he received Remuneration of INR 0.15 Crore i.e. 0.009% of Total Revenue.
(ii) Mr. Rajeev Gopalakrishnan (Managing Director)
Mr. Rajeev Gopalakrishnan, holds a Bachelor’s in Mechanical Engineering from the University of Kerala. He joined Bata Shoe Organization (BSO) in the year 1990, and has since been associated with the company. With a rich experience of 31 years, he has previously handled the positions of the Director of Wholesale Channels, Sales & Marketing with Bata International-Canada, and the Vice President of Bata India Limited in Retail Operations and Wholesale Division.
Before joining as the Managing Director of Bata India Limited in October 2011, Mr. Gopalakrishnan was the Managing Director of Bata Retail Stores for a period of 9 months. He was previously the M.D. of Bata Bangladesh for a period of 1 year. Also, the Managing Director of Bata Thailand for a period of 3 years.
Mr. Rajeev, with his visionary leadership, spearheaded Bata India’s retail operations, re-engineered business processes, diversified product offerings while maintaining a strong culture of innovative outlook.
Further, the World Consulting & Research Corporation (WCRC) bestowed upon him the honour of ‘India’s Most Trusted CEO’ in 2017.
He received INR 5.17 Crore as remuneration for F.Y. 2020-21 i.e. 0.30% of Total Revenue of the company.
(iii) Mr. Sandeep Kataria (Global CEO of Bata)
Mr. Kataria is one of the most respected names in the Consumer and Retail Industry across the developing and developed markets. A business leader with more than two-and-a-half decades’ experience, he was appointed as the Country Manager of Bata India Limited with effect from 01 August 2017.
He is an engineer from IIT-Delhi and finished his PGDBM from XLRI in 1993 as the gold medalist of the batch. As the CEO of Bata India Ltd., Mr. Kataria has helped drive the Company’s consistent growth and profitability. Under his leadership, Bata India doubled its profits driven by double digit topline growth, and sponsored some of the most ingenious campaigns, including Surprisingly Bata’, that revamped Bata’s image as a more vibrant and contemporary brand, targeted at younger consumers.
Mr. Kataria has been elevated as Global CEO – Bata Brands. Mr. Kataria has extensive leadership experience in working across geographies, backed by an intuitive understanding of consumers and a determined but inclusive leadership style. He holds 24 years of experience at Unilever, Yum Brands and Vodafone in India and Europe before joining Bata in 2017.
In the F.Y. 2020-21, he received Remuneration of INR 7.12 Crore i.e. 0.42% of Total Revenue.
(iv) Mr Gunjan Shah
*Mr. Gunjan Shah has been appointed as a Whole-time Director of the Company for a period of five years with effect from June 21, 2021. Further, Mr. Gunjan Shah has also been appointed as the Chief Executive Officer (KMP) of the Company with effect from June 21, 2021. He joined Bata India from Britannia Industries Ltd where he was chief commercial officer.
(C) Shareholding Pattern
(D) Revenue Classification
The company is engaged in the business of Manufacturing and Trading Footwear and Accessories through its Retail and Wholesale Network. Bata India offers a wide range of footwear in canvas, rubber, leather, and plastic. Currently, Bata owns brands like Weinbrenner, Hush Puppies, Scholl, North Star, Power, Marie Claire, Bubblegummers, Ambassador, Comfit, Naturalizer and Bata Red Label.
(i) Geographical Classification – Bata India
Today, Bata India has established itself as India’s largest footwear retailer with a strong retail network. Company’s 99% of Revenue comes from Indian Markets.
In the year 2020-2021, Company’s Revenue from Indian Markets de-grew by 44% i.e. to INR 1701 Crore from INR 3039 Crore in the last year. It is due to the second wave of Covid-19 infections hit the country towards the end of year. And once again it resulted in significant disruption to Company’s Business as several state governments announced partial/ complete restrictions.
(E) Operational Parameters
(i) Retail & Non-Retail Business
Bata India is mainly operates through its Retail and Non-Retail Business. Company’s Retail segment has been contributing maximum to the Total Revenue from the years. More than 85% of the Total Revenue come from the Retail Business of the company. Company’s non-retail business division comprises of Multi-Brand Outlets, Key Accounts, industrial and institutional
business divisions and exports
(ii) Footwear Pairs Sold During The year
In 2021, due to 2nd wave lockdown and Shut-down of Stores & Schools in the country, volume of Footwear sold during the year decreased to 32 Mn from 49 Mn in the past year.
(i) R&D Expenditure
Company enjoys the benefits of technical research through Bata Shoe Organization and Global Footwear Services Pte. Ltd., Singapore (GFS). Moreover, Bata renewed the Technical Collaboration Agreement with GFS with effect from Jan. 1, 2021 for a period of ten years.
In terms of the said Technical Collaboration Agreement, company also receives guidance, training of personnel and services from GFS in connection with research & development, marketing, brand development, footwear technology, testing & quality control, store location, layout & design, environment, health & safety, risk & insurance management, etc.
(ii) Raw Material Consumed
Leather and Rubber form as the key Raw Materials for Bata India. Therefore, any fluctuations in the prices of these Raw Materials directly impact the cost of Raw Material consumed by the company. In the year 2021, Cost of Raw Material consumed by the Company is INR 576 Crore i.e. 34% of the Total Revenue of the company.
Year-on-Year Cost of Raw Material Consumed by the Company is as follows –
(iii) Advertisement & Sales Promotion Expenses
There are many organized and Unorganized players in Footwear Industry. The competition in the Industry has increased due to increasing Unorganized players. In order to stay in the competition, companies have to do various efforts and have to adopt various strategies. Advertising the products is the most popular strategy adopted by the companies.
For any consumer brand, in order to drive mind share along with wallet share of the consumer, it is imperative to continuously engage the consumer with its products, communication and aspirational quotient. FMCG/ consumer facing companies spent a substantial amount of their revenue on advertising and Promotion, which drives revenue growth for the company.
Historically seen that Over FY06-12, Bata posted revenue CAGR of 15.4% driven by increased branding and new store addition aggression. It was during this period that the company’s advertising and marketing spends increased substantially. Its advertisement spends averaged 1.5%, which was pivotal in driving footfalls and conversion at the store level.
Change in Bata’s branding strategy
However, over FY13-Y17, Bata under-invested in brand building and communication—ad spends largely remained range bound at 0.9-1.0% of sales. But, in 2-3 years the company has made efforts to improve its marketing quotient along with improvement in product offerings.
It has also roped in bollywood actress Kirti Sanon as its brand ambassador for fashion forward women’s footwear. It has also appointed Smriti Mandhana (India’s youngest woman cricketer) as the ambassador for its sports brand Power. In men’s footwear, while the company is still largely known for its formal range, the shifting trend in favour of casual footwear has led to the company improving its range in the latter; to communicate the same, it had roped in bollywood actor Late Sushant Rajput as brand ambassador.
During the year 2021, Company launched new Campaigns like ‘Kick Out 2020’, ‘Ready Again’, SneakerFest campaign, ParkYourShoes and FitnessAtHome. Company also on-boarded Kartik Aaryan, as its new Brand Ambassador keeping in mind its millennial and Gen-Z customer base.
(G) Group Structure
As on 31.March.2021, Bata India Limited has 2 wholly-owned Subsidiaries.
During the Fiscal year 2020-21, Coastal Commercial & Exim Limited, the wholly owned Subsidiary, pursuant to a scheme of amalgamation approved under Section 233 of the Act, has amalgamated into Bata Properties Limited.
(H) Distribution Network and Market Share
Bata India has a strong pan-India presence. As of 31.March.2021, Company’s Distribution Network comprises of 1526 stores across cities, including 228 Franchisee Stores. Moreover, Bata Products are now available in about 25000 MBOs.
The Company is continuously expanding its footprint by entering smaller cities at a rapid pace, where opened 228 franchise stores till date. Also, the company has a longer-term plan of opening 500 franchise stores in smaller cities by 2023 to deepen its pan-India retail network.
The Company also operates a large non retail distribution network through its urban wholesale division and caters to millions of customers through over 30,000 dealers.
Year-on-Year the number of Retail Stores opened by Bata India is as follows –
BATA also continues to focus on increasing its sales through Bata.in and other online marketplaces. It also has a robust E-commerce network that delivers to over 1100 cities and towns across India.
In addition, Company also sells its products through partners like Amazon, Myntra, Flipkart, Paytm, Tata Cliq and Ajio, amongst others. It also enrolled new distributors to serve MBOs. The company has scaled up and further invested in tech-related solutions to reach out to its customers in a bid to attract and retain them.
Market Share of Bata India
The company is the largest retailer and also a leading manufacturer of footwear in India. Currently, Bata has an estimated 15% value Market Share in the Organized Footwear Market.
(I) Manufacturing Facilities
Bata India has 4 state-of-the-art Manufacturing Facilities are located strategically across India, producing a variety of footwear. All these Manufacturing Units altogether have a production Capacity of 21 Mn Footwear pairs per annum.
The Company’s Manufacturing Units are located at –
- Batanagar, Kolkata, West Bengal
- Bataganj, Patna, Bihar
- Peenya Industrial Area, Bengaluru, Karnataka
- Batashatak, Hosur, Tamil Nadu.
(J) Financial Parameters
- Operating income CAGR upto FY20 is around 9% p.a.
- As per the Management, Due to the Pandemic the operations and consequential financial performance of the Company during the financial year 2020-21 have been adversely impacted. Consequent to that, the Company had during the financial year 2020-21 incurred losses.
- On the other hand, Bata India has a healthy Liquidity position.
- Company’s PBIDT Margin has shown a regular growth till 2020, In the year 2021, Bata’s PBIDT margin got affected due to nationwide lockdown.
- On the other hand, Company’s PAT Margin is stable over the years except in 2021.
- Moreover, Bata’s ROE remains stable and ROCE has improved.
(i) Free Cash Flow as % of Total Assets
(ii) Cash& Bank as % of Total Assets
(i) A Debt Free Company
Over the past several years, Bata has remained debt free and has primarily utilized non-fund based limits from banks. The company also has significant liquidity cushion with INR 1,000 crore of cash and liquid investments as of March 2021
(ii) Improvement in Working Capital Management
Bata also has healthy Working Capital management, leading to low reliance on Working Capital limits. Company’s cash credit limits were withdrawn in 2016, indicating its healthy liquidity.
(iii) Focused on Controlling Cost
The Company focused on controlling its costs related to retail store expenses and generated more than INR 110 crores of savings by negotiating rents across 1000+ stores & closing 75 unviable stores in the year 2021.
(K) Management Discussion and Outlook
- Management stated that current economic state, challenging retail environment and new waves of pandemic pose threats to businesses across all sectors.
- The Country wide lockdowns and the “New Normal” has lead to fundamental shift in customer behavior and retail businesses in particular.
- Further, Bata India will focus on expansion in small towns and online channels as part of its efforts to save cash through enhanced productivity, cost-reduction and tight inventory management to overcome the challenges of the pandemic.
- Also, the company has adopted ‘Survive, Revive, Revitalize and Thrive’ strategy and is constantly monitoring the store level performance, driving sales through online channels and cost optimization across all functions.
- Moreover, Bata India said it is strategically positioned to harness the present challenges, given the strength of its brand, innovation capabilities, retail foothold and growing online presence in footwear and accessories category.
(L) Opportunities and Strength
(i) Expanding Distribution Network To Newer Towns
Bata continues to penetrate newer towns through franchise operated stores. Some of the new towns include Itanagar, Varkala, Sivakasi, Pali and Ratnagiri, all having population between 50,000 and 3 lakh. The company has a long-term Plan of opening 500 franchise stores by 2023 and reaching towns with population of less than 2 lakh.
Furthermore, in a bid to strengthen its wholesale distribution channel, Bata has significantly ramped up its touch-points with Bata now servicing about 30,000 Multi-branded Outlets. This will enable the company to leverage its brand strength in Tier III-V towns and increasing its Volumes as well as its Margins.
(ii) Healthy Operational Profile with Strong Brand Equity
Bata has an established track record of 90 years and a pan-India presence. The company also has a diversified product portfolio and sells through an extensive retail and distributor network. Moreover, Bata, the name, stands synonymous with quality and has been the trustworthy footwear partner for the Indian consumers. Also, company’s mix of new products, innovative brand experiences, and impactful brand positioning are sustaining its image as a bold and young-at-heart brand. Moreover, Bata is one of the Top 10 Footwear Companies in India.
(iii) New Initiatives to Aid Revenue Growth
Company has launched digitally-enabled channels like Bata ChatShop, Bata Home Delivery and Bata Store on Wheels to strengthen its e-commerce and omni channel facilities and also to cover more pin codes across the country.
Focus on omni-channel retailing resulted in 60% of marketplace orders being fulfilled by Bata stores and 100% for its own website. Also, in the institutional & distribution business, Bata won orders to supply safety & industrial shoes to companies in the cement, steel and railways sectors.
(iv) Technical Support From Bata Group
Bata is a 52.96% subsidiary of Bata (BN) BV, Amsterdam, a Group company with operations in more than 50 countries. The company has access to technical research and innovative programmes implemented by the Bata Group. It also receives technical, strategic and managerial support in its various functions, including purchase, manufacture training of managers from its Group company and in turn, pays technical fees.
Bata Shoe Organization
Bata Shoe Organization is a multinational Footwear and Fashion Accessories manufacturer and retailer. It is headquartered in Lausanne, Switzerland. A family-owned business, the company is organized into three business units – Bata, Bata Industrials (safety shoes) and AW Lab (sports style). Moreover, the company is the world’s leading Shoemaker by volume and it has a Retail presence of over 5,300 Shops in more than 70 Countries and production facilities in 18 Countries.
(v) Cost Rationalizations Led To Margins Improvement
The company continued to optimize its retail network and also took appropriate measures to rationalize cost in terms of rentals, operations and manufacturing to drive efficiencies in its value chain. Cost-focused initiatives undertaken across multiple work streams will continue to have a long-term visible impact on the results, post-pandemic as well.
(M) Key Risk/Concerns
(i) Increasing Competition
Bata is the only player which is present across categories and price points. However, the competition continues to grow with unorganized sector moving into organized space.
Also, the company has been facing intense competition in all product categories as established players have been setting up new manufacturing facilities, besides increasing capacities in their existing plants. Further, multinational majors like Clarks, Zara, etc. have made inroads into the organized footwear market in India.
Moreover, the sales of branded footwear through e-commerce platforms have increased competition as new brands can now enter the Indian market without having to create a large nationwide distribution network.
(ii) Adverse Impact of Covid-19 Pandemic
With the Covid-19 pandemic impacting people across the globe, socially and economically, Company also witnessed severe disruption in its operations and closure of Stores and Manufacturing Facilities, which also impacted the annual performance of the company.
While, its fixed costs have to be serviced during this period. There also remains uncertainty concerning the extent of the impact on the revenues and cash flows in FY2022.
(iii) Volatility In Raw Material Prices
The profitability of the company are affected by raw material price fluctuations. Any adverse movement in the prices of raw materials may have a negative impact on the company’s margins, considering its limited ability to pass on the price hike to customers owing to intense competition.
However, to counter Raw Material risk, the Company works with variety of leather, PVC and rubber with the objective to moderate raw material cost, enhance application flexibility and increased product functionality.
Drop us your query at – firstname.lastname@example.org or Visit pawealth.in
References: Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.
Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.