Bata India, the countrys largest shoe-maker, has staged a remarkable turnaround, declaring a profit of Rs 4.15 crore for the year ended December 31, 1996.
This is a significant recovery from the loss of Rs 42.16 crore the company suffered in the previous year.
Bata Indias turnaround is being attributed to the successful marketing performance of the company, together with cost reduction measures, an improvement in distribution systems and a strengthened management team, led by managing director W K Weston.
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These factors have contributed to a turnover of over Rs 590 crore for the company, an increase of 11 per cent over last year with no significant rise in expenditure.
M J Z Mowla, vice-president of the company, said, Our marketing strategy has been the single most important reason for the turnaround by Bata India. Earlier, for a while we were mainly focusing on the low-volume premium range. Then the company went back to our earlier strategy of volume footwear at popular prices in the low to medium price range.
He added that from 1995, the company has been reducing its expenses and reconstructing its offices.
We have shifted our head-office within Calcutta, and some of our offices have also shifted to Batanagar, Mowla said.
For 1997, our focus will be to make our units more profitable and we have already set our targets, he added.
The companys trade unions have also welcomed the improved results.
S S Gupta, general secretary, All India Bata Shop Managers Union said, The administrative changes in the company, together with quality control measures and higher efficiency have also contributed to the improved performance.
The companys financial position was strongly supported in 1996 by the majority Bata Overseas Shareholder, which lent $10 million (approximately Rs 34.35 crore) in March 1996 pending conversion to equity in the rights issue.
The conclusion of the rights issue at a premium has put the company in a much sounder financial position.
Net sales for the financial year 1996 of the company was Rs 590.5 crore, an increase of 11 per cent against Rs 532. 36 crore in 1995.
After paying a sum of Rs 19.30 crore (Rs 18.85 crore) as interest and another Rs 10.17 crore (Rs 12 .26 crore) as depreciation, the company posted a profit after tax of Rs 4.15 crore on a paid up equity share capital of Rs 25.71 crore.
Reserves excluding revaluation reserves stood at Rs 33.62 crore as against Rs 29.41 crore in the last fiscal.
At present the company has five manufacturing units in the country.
The largest Bata factory in the world is situated at Batanagar. The company has a factory at Patna, Faridabad, Peenia and a tannery in Mokameghat.
The company also has an export oriented unit at Hosur in Tamil Nadu.
The company currently has 1000 retail outlets and 600 franchise outlets under it.
Its export sales have, however, not improved much, standing at around Rs 24 crore, as against Rs 22.7 crore in 1995.