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Our Bureau

Kolkata June 17

BATA India Ltd on Thursday gave an assurance to shareholders at the company's 71st annual general meeting that the proposed major business re-engineering-cum-financial restructuring plan involving a financial package would also benefit shareholders, who have been going without dividend for some years now because of the huge losses suffered by the company.

Some new initiatives are being taken to generate interest-free funds in the not-too-distant future, which would benefit shareholders too, it is learnt.

The company also reaffirmed its commitment to West Bengal by stating that there was no move afoot to sell off its Batanagar (oldest and largest factory of Bata India) land, and that, instead, an ambitious programme has been chalked out to re-develop the surplus 300-odd acres of land at the factory site into a model township, with housing, schools, hospitals, shopping malls, etc.

"Our objective, according to the company's top management, was to bring about a qualitative change in the environment at Batanagar, so that it evolves into a satellite township in due course. The project is being executed as a joint venture with Calcutta Metropolitan Group Ltd and Kolkata Metropolitan Development Authority.

Talking to newspersons here today, after the annual general meeting, Mr P.K. Nag, Deputy Managing Director and CFO, said the project was expected to roll by November. We are examining it now from all legal angles, and the State Government has assured us of all clearances, he pointed out.

Asked if Bata India's Canadian parent would pitch in with any funds support, he said the costs of the massive "show piece" project, to be taken up in phases, would be met entirely from within the Indian set-up.

On the proposed scheme of arrangement, as a measure of rationalising manufacturing facilities, under which the company had applied to the Calcutta High Court to demerge its production units at Faridabad and Mokamehghat, Mr Nag said the company has decided to go in appeal before the Supreme Court, challenging the conditions set by the High Court for approval of the scheme.

One of the conditions pertained to payment of guaranteed wages to employees till the age of superannuation, which was found unacceptable to the company.

Earlier, addressing shareholders, the new chairman, Mr P.M. Sinha, said only some of the company's operations have been shifted to Gurgaon, Delhi, to stay closer to the market place, and the company's commitment to Kolkata customers still remained as it was before.

In this context, he said the company has already dropped the resolution (No 8) pertaining to delisting from the CSE from its notice convening the AGM.

Admitting that the current cost structure was totally unsustainable and unviable, Mr Sinha said Bata has been compelled to speedily restructure business operations and reduce costs.

The company has planned a major restructuring and re-engineering of operations in the areas of manufacturing facilities, logistics and distribution and simultaneously focusing on modern low-cost retailing.

He said this was urgently needed to fight competition and improve profitability, while increasing market share and presence.

Bata India, as the largest player in the Indian footwear sector, now has a market share of 6.8 per cent. Mr Sinha said as a first step, the cash drain stores would be closed down in a phased manner.

While retail business during 2003 increased by 6 per cent in value, the wholesale business declined primarily owing to restrictions on supplies as a means of recovering customer outstandings. The company, on a trial basis, has converted three of its wholesale depots to "cash-and-carry" outlets to assist in overcoming the receivables problem.

In 2003, Bata achieved a turnover of Rs 711.4 crore (Rs 694.1 crore), recording a loss of Rs 21.3 crore. In the first quarter of the current year, the company has recorded substantial losses.

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