Bata India, the 51 per cent subsidiary of Bata BV of The Netherlands, plans to buy back its shares. The Indian outfit of the Dutch parent has decided to place a special resolution to authorise the company to buy back shares at its ensuing annual general meeting on June 28.
But whether the buy back will lead to the country's largest manufacturer and shoe marketer of footwear delisting from the Indian bourses, as other foreign companies are contemplating now, is not known.
Bata India sources said the special resolution pertaining to the buy back of shares was being passed to empower the company to buy back its shares as and when required.
Market sources, however, said the parent might increase its "effective control" on Bata India substantially by converting it into a closely held company through the buyback route. Many foreign companies have effected delisting of their Indian outfits in the recent past after a buyback had mopped up almost all the shares held by the Indian public.
The price of the buyback offer has not yet been decided and that would be critical in determining the reponse to the offer. The Rs 10 paid-up equity of the company is quoted at around Rs 35. Since March last year, the stock touched a high of Rs 61.10 and a low of Rs 28 on the Bombay Stock Exchange.
"The Companies (amendment) Act, 1999, brought about an important change wherein it has been provided that a company may purchase its shares for that it has to have a provision in the articles of association authorising it to do so. Otherwise, the articles must be amended by a special resolution and hence the special resolution is planned," sources added.
Bata BV has a 51 per cent stake in Bata India, while financial institutions hold 11.49 per cent, FIIs 1.77 per cent, Indian corporates 3.89 per cent, mutual funds 0.37 per cent, banks 0.06 per cent, NRIs 0.12 per cent and the public 31.30 per cent.
The Rs 772-crore company, which is "taking numerous steps to arrest the downturn", is endeavoring to "make Bata a family brand with products at all price points."
Sources said: "As a policy of focused marketing and reaching out to the masses, the company is in the process of creating a four-tier hierarchy of dedicated stores, each designed to meet the needs of a particular kind of customer. It aims to make shopping a pleasure experience by providing comfortable ambience to the customers at the same time provide value for money."
