The Hindu : Business : Bata India to tap rural market

Online edition of India's National Newspaper
Tuesday, Jun 28, 2005

Business

Business

Bata India to tap rural market

Special Correspondent

Puts in place a slew of business revamp measures; offers another VRS

KOLKATA: As part of its survival strategy, multinational shoe company Bata India is planning to strengthen its retail network in rural areas, where it does not have a major presence now, Chairman, P. M. Sinha, said.

Addressing shareholders at the annual general meeting here, Mr. Sinha said the company, which is trying to craft a turnaround, had put in place a slew of business restructuring and financial recast measures which include shutting down 60 unviable units, outsourcing from four units in tax holiday states and opening flagship stores in 12 cities.

Packed house

A sizable number of shareholders had turned up at the meeting although there was a transport strike (called to protest against the fuel price hike, by CITU and supported by the Left trade unions).

The MNC planned to trim its workforce by another 800 this year, Mr. Sinha said. In 2004, the company separated 1,469 employees. The company has begun talks with its unions to introduce a variable component in wages by linking incomes to sales performance.

Mr. Sinha said the full impact of the restructuring would be felt by 2006, although some results have begun to flow in. The company reported a Rs. 50 lakh net profit in the first quarter of 2005 (it operates on a calendar year basis). This comes after a Rs. 62 crore loss in 2004.

The company is implementing a financial recast, under which it will utilise the funds from its recent rights issue to repay debts and reduce interest costs. Margins are expected to improve further with cheap shoe imports.

Referring to the re-development of the Batanagar estate in West Bengal, the chairman said that a joint venture with the Kolkata-based real estate developer, Calcutta Metropolitan Group, had been formed. HOK International of the U.S. and Larsen & Toubro, Chennai, have been appointed the master planner and the infrastructure utility consultant for this project. The appointment of Bata's new Managing Director, Marcelo Villagran, was also approved at the meeting.

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