Financial Daily from THE HINDU group of publications
Saturday, Jun 29, 2002
Bata India in talks with parent to kick up pace EGM on July 8 for scheme of arrangement
Mr A.L. Mudaliar (right), Chairman, Bata India, addressing shareholders at the 69th AGM of the company in Kolkata on Friday. Also seen is Mr C. Morzaria, Director.
KOLKATA, June 28
ADMITTING the performance of Bata India Ltd in the first quarter of 2002 (Jan-March), which led to a net loss of Rs 4.2 crore, was poor, Mr A.L. Mudaliar, Chairman, said the Bata board was now in talks with Bata Ltd, Toronto, on how best to combat the threat of both domestic and foreign competition.
He was addressing shareholders at the company's 69th annual general meeting here today.
An extraordinary general meeting of the company has been called on July 8 to seek shareholders' approval for the proposed scheme of arrangement, under which some of the operations of Bata India will move into Fashion Shoe Pvt Ltd (FSPL) and BDCL Enterprises Pvt Ltd.
The new arrangement is expected to be beneficial to all three - BIL, FSPL and BDCL - providing an effective platform for a more competitive and cost-effective production base and thereby help improve the financials of BIL.
The chairman said the plan was to make the loss-making factories at Mokamaghat, Bihar and Faridabad, Haryana, which were bleeding the company, commercially viable, with a focused management at the helm.
According to him, 2001 was a year of restructuring in all areas of operations with special emphasis on improvement in logistics, centralisation of functions/controls, and rationalisation of cost structure in every area. Pointing out that the fortunes of most corporates were yo-yoing in the last two years, he said the performance of the footwear sector in the marketplace and the changing consumption pattern were directly linked to the purchasing power of the average customer.
Stating that the new 10-year technology agreement with Bata Toronto, effective January 1, 2001, had given a big boost to the new initiatives of the company, resulting in the launch of several new products in all market segments, he cited constant product innovation as the new mantra.
The company has paid a technology fee of Rs 11.9 crore to the parent outfit during 2001.
Clarifying that shareholding by the Canadian parent would remain the same, with full support for the Bata India management, he said that the proposed scheme of arrangement was well thought-out.
He also justified the move to go ahead with the sale of unproductive fixed assets. The shareholders today approved the enabling resolution (for change in Articles of Association) on buyback of shares.
On the industrial relations front, Mr Mudaliar said the atmosphere at the main factory at Batanagar in Bengal was conducive to productivity and flexibility. The company was able to move some of the personnel from one department to another in order to enhance productivity.
On the Peenya factory in Karnataka, which was under lockout from October 1, 2001 to January 7, 2002, Mr Mudaliar said 45 workers had agreed to the company's terms and that efforts were being made to maintain output levels through outsourcing till normal operations were resumed.
Describing the large network of retail stores as the foundation of its sales, he said a programme had been launched to refurbish the existing stores, while at the same time exploring opportunities for new openings.
BIL is also reclassifying its retail stores (four-store concept) to meet changing customer requirements, and the top of the rung will be the international stores, located in major metro cities, stocking the newest lines and brands.
A policy of "New shoe every week" is being adopted to cater to the needs of the fashion-conscious and value-seeking customers.
And to further penetrate the market, BIL has adopted a focused advertising strategy, under which about Rs 4.8 crore was spent during 2001. The company is now reinforcing its brand promotion programme in `Bubblegummers', `Weinbrenner', `Power' and `Bata All Seasons' for target customers.
Replying to shareholders' anxious queries on frequent changes of managing directors, Mr Mudaliar explained that while Mr Keith Weston vacated office after retirement, Mr Morzaria was promoted and posted to serve with Bata Toronto.
Hence, a new managing director in the form of Mr F. Garcia was appointed.
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