Bata plans Rs 70 crore issue in Feb

Bata India Ltd (BIL) plans to raise a maximum of Rs 70 crore through its rights issue which will hit the market in February. The price band of the book-built issue, first of its kind for a rights issue, has been fixed between Rs 45 and Rs 54.

BIL would be offering 1.23 crore shares on 1:4 basis to existing shareholders. It has also decided to enhance the company's authorised capital from Rs 60 crore to Rs 70 crore by creation of additional one crore equity shares of Rs 10 each for which it will seek shareholders approval soon.

The scrip is now hovering around Rs 87 at bourses. Analysts said the cut-off price was likely to be Rs 54, the upper band for the issue. The scrip hit a 52-week high at Rs 98 in end December.

"We have appointed ICICI Securities as the merchant banker to the issue," informed P K Nag, director-finance, BIL.

Officials from the company said the subscribed capital of the company stands at Rs 51.4 crore against an authorised capital of Rs 60 crore. The authorised capital is being increased to enable the company issue further equity shares and raise further capital as and when it would be required.

"The funds generated from the issue will be utilised for working capital needs of the company and for augmentation of long-term resources for existing operations and for reducing the trade debt of BIL," explained A B Anand, company secretary, Bata India.

"The company has been suffering losses for the past two years. BIL is carrying a huge baggage of the past. At present it in the process of restructuring its operations, which is a huge task, considering the company's operation which is spread across the length and breadth of the country. The company's employee costs are as high as 26 per cent of the turnover, which is unsustainable. In order to rationalise manpower, BIL has a voluntary retirement scheme to reduce workforce. Cash drain stores are being closed down in a phased manner to improve overall profitability," he added.

"Bata India is also trying to simplify its operations to increase manageability of its businesses. New and exciting products, competitively priced and providing value for money, are being launched. All these steps are directed towards reviving the company's operations. Since retailing is the inherent strength of BIL with over 1,000 retail outlets "" these are being given a facelift. It has also undertaken market extension program for rural penetration," he explained.

"BIL is expected to slowly but surely recover with the improvement of its retail operations and restructuring its cost of production through manpower rationalisation, consolidation of production process through focus on assembly functions," Anand said.