Between convincing angry unions and visiting distant markets each Friday, the Chilean head of Czech shoe major Bata's turned it around in 30 months. Friends had warned that Wildfire, the Brazilian restaurant at the recently-opened Crowne Plaza in Gurgaon, was hardly the best bet for a strict vegetarian, but the venue was fixed by Business Standard's Latin American guest, Marcelo Villagran, managing director and CEO of Bata India. While the Chilean MD of the Czechoslovakian shoe company enjoyed the grill with its meaty offerings of tenderloin, lamb, pork sausages and chicken, sliced off the rotisserie at our table, I struggled to make sense of the unappetising vegetarian fare that included eggplant caponata and (ugh!) three cheese souffles. Fortunately, that was compensated by Villagran's openness about the company's problems and its future plans, writes Shuchi Bansal.
A stickler for time, Villagran arrives at one o'clock sharp. Dressed in a business suit, he's accompanied by a hotel executive who fusses over him. Settling down into the chair, he explains the attention. "Three people I knew at Uppal's Orchid and Fortune Hotels (in Gurgaon) have moved here. They recognise me," he says, with a heavy Latin American accent.
Employee churn in India is big problem, he remarks, obviously referring to the hotel executives he just met. However, his immediate concern is different. "I will not be able to negotiate better rates at Crowne Plaza as the staff knows my deals with the other hotels," he rues, making his fervour for business quite apparent.
His focus on the task at hand is also admirable. Nothing distracts him from the conversation, be it the boisterous background music, frequent interruptions by the chef or the arrival of the photographer. The lunch menu is fixed and little time is wasted in ordering drinks "" a diet Coke for him and a ginger brew for me "" and our conversation is interrupted only when the rotisserie is brought to our table. Even as Villagran relishes his platter, I tease my mashed potatoes with a fork.
He may not admit it, ("that's for Mr Bata to say") but Villagran was handpicked by the shoe major to steer Bata India out of the mess that it was in. And the 62-year-old former head of Bata's Chile operations, who's also driven the company's businesses in Singapore, Peru, Columbia and Canada, has managed to do just that.
In his two-and-a-half years at Bata India, he's moved the company back into the black and declared a Rs 40 crore profit on a turnover of close to Rs 800 crore. When he arrived in February 2005, the Bata balance sheet was inked in red. The losses were nearing Rs 64 crore and the company was dogged by union problems.
"Everyone says that the turnaround has been achieved in an incredibly short time and I agree with them," says Villagran, matter-of-factly. The journey's not been easy, though. To put the company back on track, he claims to have pleaded with the unions for two years. "For the first one year I spoke to them personally. We will die unless we mend our ways, I told them on every single visit to Kolkata," he says.
Their inflexibility was proving suicidal. For instance, Bata showrooms could be kept open only for eight hours in a day even though the state governments had revised their rules. Unions did not allow stores to open on Sundays, even as footfalls in shopping areas increased over weekends. Above all, not a single retail worker could be moved from one store to another even in the same city without the union's approval.
No amount of homilies on India's changing economic landscape and consumer preferences could make them change their attitude to work. Eventually, 400 workers from the store unions, and there are six of them, were sacked. Villagran claims that the factory unions have been spared. However, another 1,000 people accepted the company's voluntary retirement scheme. Today, Bata shops are generating more revenues and the workers are earning better commissions, he claims.
Other cost-cutting measures such as closing down unviable shops (nearly 70 downed their shutters) and better stock management helped in accelerating the turnaround. A few drastic measures are now needed on the product and retail side, feels Villagran. "I noticed that our collections do not reflect world trends. The Indian customer's taste is no different from that of customers around the world," he observes.
Bata now intends to focus on premium products. "We are getting out of the commodity business (read low-end, mass market shoes)," says Villagran. That is, the company will stop manufacturing hawai chappals and school shoes. "No, I don't mean we will stop selling them, but we will outsource them at better prices," explains Villagran. Bata's own factories will only churn out trendy and fashionable products. "It's the standard rule of the game. You cannot produce everything from A to Z in a factory," he says, digging into another helping of chicken drumsticks that follow the chicken soup.
In its new avatar as a retailer of trendy footwear, Bata expects to draw the young customers to its stores. For that, Villagran has already re-launched North Star, its 30-year old lifestyle brand, which lost the race worldwide when the market evolved. "In September you will see a large collection under North Star in the stores."
He is also bringing the Weinbrenner brand for the first time to India. "It is a casual outdoor shoe "" a heavy shoe with a heavy sole," he explains, adding that sports fashion is a big thing around the world. The new product range will also need appropriate retail ambience. So money is being pumped into new stores. At least 11 of them have come up in the last three weeks. Villagran's target is to open 70 stores this year and 200 in the next three. All the showrooms will be housed in areas varying from 6,000 square feet to 10,000 square feet. "The Indian consumer has changed. He is looking for space and lifestyle," observes Villagran.
That Villagran, who studied engineering and business management at Santiago before joining Bata 34 years ago, has neither family nor friends in India, perhaps, helped him focus on the company completely. After all, the MD works long hours and has found an ingenious way to beat boredom over the weekends. On Fridays, he takes off on a market visit to any part of India. For someone who had never set foot in the country till he accepted the assignment, he's scanned its most vital markets in the last two years.
Villagran admits that his weekends are tedious since he cannot pursue any of his passions in India. "I am not into golf or cricket at all. And none of what I like doing "" skiing, sailing and biking "" is possible here. Biking is too risky in India," he says. He's also got involved with the Bata township project that's coming up in Kolkata. "No, I did not start it, but the 262-acre Riverbank township project is a joint venture between the Calcutta Metropolitan Group and Bata. It will be a like a city where we are also doing apartments for our people," he explains. The city will boast of a hotel, mall, hospital, club, school and more than 3,000 apartments.
Villagran is not clear when he will be asked to return. For now, he's enjoying work and expects Bata India to become a Rs 1,000 crore company. But isn't a Rs 1,000 crore shoe company too small for a country the size of India? "We have no pretensions. We are not a monopoly in India. There are many other companies selling shoes," Villagran says. Besides, in terms of pairs sold, India is Bata's largest operation in the world, the most profitable being Italy.
Having feasted on a variety of meats while I've mostly fasted on bean curd parcels and an eggplant dish, I lunge at the cheese cake on offer while Villagran settles for another diet Coke. A few moments later, the chef emerges from the kitchen to enquire about his preparations. "You are not a Brazilian," says Villagran, reading his identity tag, a tad disappointed. "No Sir, I am an Indian," the chef apologises.
While he may be enjoying the glory of turning a loss-making business profitable, Marcelo Villagran clearly misses home.
