The Hindu Business Line : Bata net loss rises to Rs 26 cr in 2003

BATA India Ltd, for the year ended December 31, 2003, while recording higher net sales as compared to the previous year, has reported a net loss of Rs 26 crore, up from the previous year's net loss of Rs 7.4 crore.

Net sales for the period under review has increased by 2.5 per cent to Rs 711.4 crore, against the Rs 694.1 crore for the previous financial year. The company has reported a net loss of Rs 14.3 crore for the quarter ended December 31, 2003, against a net profit of Rs 3.2 crore for the corresponding quarter of 2002.

Total income for the said quarter has also shown a slight increase at Rs 185.9 crore (Rs 181 crore). Total expenditure like staff cost, excise etc for 2003 has increased to Rs 717 crore (Rs 694.5 crore). Interest payout has dropped to Rs 7.8 crore (Rs 8.3 crore). The audited financial results of the company were taken on record by the board at its meeting here today.

According to the company's notes, the results for 2003 were better than last year, but for the one-time additional charges/lower income (a total of Rs 21.1 crore) in terms of items such as provision for long term agreement (Rs 7.6 crore), decrease in other income including gain from disposal of fixed assets (Rs 5.3 crore), charging of deferred tax assets in compliance with AS interpretation (Rs 4.9 crore) and provision of unfounded pension liability owing to unprecedented hike in cost of annuities by LIC.

Bata has already launched a VRS to reduce the workforce substantially, with an estimated total cost (including benefits) of Rs 3.7 crore. It is clarified that SBI, the lead bankers of the company, has agreed to finance the manpower optimisation programme with a pay back period of 1.7 years. It is learnt that the company was also in discussions with the unions to bring in a variable pay structure in the Bata Stores to keep the remuneration cost in line with business.

The company has also entered into a "landmark" agreement with the unions by capping DA, which would help drive down the major fixed remuneration costs. According to the Bata management, the long-term agreements in 2003, concluded with unions of Shop Employees & Factories located at Bataganj, Mokamehghat and Southcan and union of Shop Managers (in January 2004), are expected to provide flexibility in terms of operations and cost structure.

According to Mr S.J. Davies, Managing Director, the Bata plan was to present an international shopping experience to customers at urban markets and shopping malls. "Remodelling of nearly 250 Bata stores will help us to achieve a significant growth against the current level of turnover."

According to Mr Davies, "our vision for the coming days is to touch the magic figure of 100 million pairs from the present 60 million pairs annually." Bata now plans to have around 40 flagship, 120 City and 800 Family Stores in place through a combined strategy of opening new stores and closing down unviable ones, he added.