Bata India Limited

Version 12.1 by Asif Farooqui on 2021/07/20 06:12

Contents

Overview
- Brands
Industry structure and developments
- Opportunities and Threats
Business Overview
Financial Highlights
References

Overview

Bata India (NSE:BATAINDIA) is the largest retailer and leading manufacturer of footwear in India and is a part of the Bata Shoe Organization.¹

Incorporated as Bata Shoe Company Private Limited in 1931, the company was set up initially as a small operation in Konnagar (near Calcutta) in 1932. In January 1934, the foundation stone for the first building of Bata’s operation - now called the Bata. In the years that followed, the overall site was doubled in area. This township is popularly known as Batanagar. It was also the first manufacturing facility in the Indian shoe industry to receive the ISO: 9001 certification.

The Company went public in 1973 when it changed its name to Bata India Limited. Today, Bata India has established itself as India’s largest footwear retailer. Its retail network of over 1375 stores gives it a reach / coverage that no other footwear company can match. The stores are present in good locations and can be found in all the metros, mini-metros and towns

Bata’s smart looking new stores supported by a range of better quality products are aimed at offering a superior shopping experience to its customers.

The Company also operates a large non retail distribution network through its urban wholesale division and caters to millions of customers through over 30,000 dealers.

Besides owned stores, Bata brand is also available through a large network of dealers. Bata, the name, stands synonymous with quality and has been the trustworthy footwear partner for the Indian consumers. As a brand, Bata is aspirational, vibrant, and sought-after. The company's mix of new products, innovative brand experiences, and impactful brand positioning are sustaining its image as a bold and young-at-heart brand. Commitment to quality, combined with an excellent mix of design, comfort, and affordability, makes Bata the No. 1 footwear brand in India. Taking global, regional and local fashion trends into account, the company endeavour to provide consumers with a fresh new collection, every season.

Bata is the world’s leading shoemaker by volume, designing stylish and comfortable footwear at surprisingly affordable prices. Today, Bata remains a family business, which serves over one million customers a day in its 5,300 stores, and producing locally in its 23 Bata-owned manufacturing facilities across five continents. Even though it is a global company headquartered in Switzerland, the brand caters to the unique local needs of customers in countries across Europe, Africa, Asia & Latin America.

Brands

BATA²
MOCASSINO
AMBASSADOR
HUSH PUPPIES
SCHOLL
COMFIT
MARIE CLAIRE
BUBBLEGUMMERS
WEINBRENNER
POWER
NORTH STAR
NATURALIZER
CAT

Industry structure and developments

India’s resource strengths in the form of materials and skilled manpower is a comparative advantage for the country. The increasing use and variety of footwear is leading to an upsurge in demand indicating higher growth prospects for the footwear industry. While Tier I cities have always been brand centric, Tier II and Tier III cities are catching up and therefore sales of branded products are expected to grow significantly in the future.³

The Indian footwear market is expected to grow at a double digit and by the year 2022, total market is expected to be around Rs. 72,000 crores with a CAGR of 11%. The Branded footwear is expected to garner substantial market share and this will be supported by the growth in both organized and online retail sale simultaneously. Branded footwear currently accounts for around 45% and unbranded dominates with 55% market share respectively. In case of online retail, Brands are also launching dedicated product range for online channel to differentiate from offline channel and are using data analytics to grow the business. The online sale of footwear is expected to grow in high double digits.

The growing population and the continuous demand has made India the second largest producer of footwear in the world after China and also the world’s third-largest footwear consumer after China and the USA. It is estimated that more than 80% of the produced goods are consumed within the domestic market. The market has also witnessed expansion of existing international brands in the country and the entry of premium formal and sportswear brands.

The change in lifestyle, preferences, growing health and fitness awareness amongst urban Indians has also led to a boost in the fitness footwear industry in India. As a result, products like apparel, accessories and variety of fitness equipment now tops priority in shopping lists of consumers around the country primarily including comfortable branded fitness footwear. The Indian fitness footwear segment is witnessing a steady boom and is expected to grow with rapid pace during 2019 - 21.

The Indian footwear industry has been witnessing a change from a need-based industry to fashion, style and fitness oriented industry and it has also got the potential to increase its global market share in footwear export. With changing lifestyles and increasing affluence, domestic demand for footwear is projected to grow at a faster rate than it has been seen during the last 10 years.

Opportunities and Threats

Changes in the external business environment along with growing competition from domestic and foreign players in the industry has posed challenges for sustained future growth. To maintain such growth, the company is taking necessary steps such as focusing on stylish, comfortable and durable quality products so as to be ahead of competition.

Sports and Kids categories are one of the fastest growing among all categories therefore attracting traction from all footwear brands. The company is set to take leverage of its strong brands “Power” and “Bubblegummers” including testing of exclusive concept stores. Another opportunity is the upgradation of consumers from unorganized and low priced footwear to branded and lifestyle products thereby enhancing their experience. The company is uniquely placed to take advantage of this trend with its aspirational brand image, wide range of recognized brands and unparalled retail footprint.

With the infusion of new lines in men’s and women’s contemporary collection along with exciting and colorful range for teenage consumers and a range of offerings for the sports & fitness lovers the footfalls at stores are increasing. A range of products in the casual and lifestyle offering especially for working women are expected to create a sustained demand for the future.

The brick and mortar retail industry is also expected to witness intense competition from the innovative digital platforms. The company has increased its focus on consumer facing technology and rolled out a full suite of Omni-Channel solutions in 400+ stores as well as upgraded its online experience.

Business Overview

Retail Business

The company has followed a strategy of driving same store growth while adding new retail stores in Malls and High Street locations to enhance its Retail footprint. These spacious new stores are located in the growing markets of the country and are based on the global design ‘Red Angela Store Concept’. These stores are the new face of Bata in India & the first touchpoint for consumers to experience “Surprisingly Bata”. It has simple clean lines of design thinking and uses essentially 2 colours, red & white that are uniquely identified with brand Bata.

The company shall continue to make investment on renovating existing stores hence creating a delightful shopping experience for the customers by improving store layouts and creating an emphasis on key products within the retail stores. The company plans to focus on building the Bata Brand and attract more footfalls in the retail stores through breathtaking windows, in-stores activities and amplify various new launches of products and collections. The company is also focused on improving customer service at stores through regular training of store staff. The company has initiated a “Store Excellence Program” which aims to improve customer journey inside the stores & improve business parameters while delivering excellent customer service.

During the financial year ended March 31, 2019, the company opened 71 new Bata retail stores, 51 Franchisee stores & renovated 47 stores across India. The company also relocated 14 stores and closed 28 stores.

The company is strengthening various brands under the umbrella of Bata like Power & Bubblegummers & have continued testing these formats in couple of more locations. Now the company operates 3 Power & Bubblegummers stores. A new concept of Bata Woman also has been tested with 2 stores in Bengaluru. These new concept stores would open new consumer segments for it in times to come.

Digital Multi-Channel Business

The company’s online business has recorded a significant growth during the year under review. The company sold more than 1.5 million pairs of footwear through online channels and achieved a turnover of over Rs.1,200 Million. The company’s e-commerce presence has penetrated in 1000+ cities and towns across India.

Hush Puppies

Hush Puppies entered Indian market 20 years ago & initially positioned as “Premium Men’s Dress Footwear Brand”. Last year also, as a team Bata India has worked on the products, marketing, stores & overall customer experience to re-position it as “International Premium Lifestyle Brand”, which is in synchronisation with current global brand positioning. Today, Hush Puppies is the biggest brand in Premium Footwear space with increasing market share on year to year basis.

The Brand has traversed from being Men Dress brand to becoming a Lifestyle Casual footwear brand in last couple of years. The product mix varies from Dress to casual, from closed to open footwear in both Men & Ladies with a strong presence in Hand Bags / Socks / Accessories. It has now shoes for literally all occasions in a life of an urban consumer. Hush Puppies believe in vision of “treating the world to their favorite shoe”. With increasing per capita footwear consumption & a wide variety of national & international brands operating, Indian market has become really exciting turf to play on. Hush Puppies would like to maintain its leadership position in market as well as in the heart of Indian consumers.

Currently, the main focus is on urban Indians residing in Metro & Tier I and Tier II cities through Hush Puppies concept stores & through a wide Bata Network that goes up-to Tier III cities as well. Fast growing online (e-commerce) is helping it virtually reaching every corner of India & helping aspiring consumers to own a pair of Hush Puppies. This Brand is already having 90+ Company owned & managed Exclusive Brand Outlets which would cross 100 mark by the end of 2019.

Hush Puppies is an aspirational brand for urban India & the company will continue to attract consumers through exceptional products, beautiful stores which are in-line with Global store concepts & best in-class customer service.

Children’s Footwear

In order to cater to the children’s ever changing footwear demand, the company has been introducing many new designs and innovative footwear. Through ‘Bubblegummers’ brand of footwear, the company has always been striving to make quality shoes with uncompromising comfort and features that safeguard their little feet. Bubblegummers is retailed through all Bata stores across the Country and has been the first point of contact to start its consumers’ journey to establish long term association with Bata. With 18% of the Country’s population below the age of 10 years, the potential to grow in the children category of footwear is huge, which makes this category as one of the key focus areas for the company.

The company has further established an association with The Walt Disney Company India Pvt. Ltd. and working with a set of designers from Disney, to create a complete collection covering all types of footwear ranging from casual shoes, canvas shoes and Ballerinas to everyday-wear sandals and chappals. The company has created exclusive ‘Disney Corners’ in some of its key retail stores across major cities in India to highlight the collection and add value to the children category of footwear range.

Non-Retail Business

The company’s non-retail business division comprises of urban wholesale, industrial and institutional business divisions and exports. Across all the divisions, actions are taken to improve customer service, enhancing quality of Product / Packaging and Upgrading the capability of Employees.

Bata Club

The Company’s loyalty programme “Bata Club” has increased over the years and currently it has over 25 Million members. The programme engages with its members continuously and rewards them with special benefits to drive repeat purchase, conversion and footfalls. The Company has also started doing various innovative technology-driven promotions to leverage big festivals and events and further increase engagement from its member base.

Financial Highlights

May 25 2020. Bata India Ltd reported a 56.68 percent decline in consolidated net profit at Rs 38.40 crore for the fourth quarter ended March 2020 due to COVID-19 induced lockdown.⁴

The company had posted a net profit of Rs 88.66 crore in January-March quarter a year ago, Bata India said in a BSE filing.

Revenue from operations declined 8.77 percent to Rs 620.57 crore during the quarter under review as against Rs 680.23 crore in the corresponding quarter of last fiscal.

"The decline is primarily attributed to the severe disruption in operations caused by lockdown due to the COVID-19 pandemic," Bata India said in a post-earnings statement.

Total expenses declined 3.81 percent to Rs 579.46 crore as against Rs 602.46 crore a year ago.

For fiscal year 2019-20, Bata India's net profit was almost flat at Rs 328.95 crore. It stood at Rs 328.99 crore in the previous year.

Revenue from operation rose 4.26 percent to Rs 3,056.11 crore in 2019-20 as against Rs 2,931.10 crore in 2018-19.

"It is gratifying that despite closure of its retail outlets due to the lockdown, the company were able to close the year with turnover and profit growth. This was possible on account of focus on diversification of product portfolio, consumer-centric campaigns, new and franchise store openings, non-retail and digital businesses," Bata India CEO Sandeep Kataria said.

The company is expanding its e-commerce footprint and ramping its presence in online marketplaces, allowing delivery in over 1,300 cities, rolling out home delivery across over 900 stores, he added.

Bata India is also giving its customers an option to shop from homes via WhatsApp chat with neighbourhood stores of the company, Kataria said.

On future outlook, Bata India said it is closely working with the Council for Footwear, Leather and Accessories (CFLA) and Retailers Association of India (RAI) to take up industry-relevant issues like rentals, safety of customers and retailers' needs.

"In parallel, it is working on various cost-optimisation measures including rentals renegotiation, closure of unviable stores and digitalisation drive across the organisation etc to eliminate redundancies and bring efficiency in value chain," the company said.

In a separate filing, Bata India said its board has recommended a dividend of Rs 4 per equity share for the financial year ended March 31, 2020.

The board also approved re-appointment of Ram Kumar Gupta as Director Finance (Chief Financial Officer and Key Managerial Person) of the company for a period of three years from August 19, 2020, it said.

Bata India posts Rs 44.32 crore net loss in Q2 ⁵

November 10,2020; Footwear major Bata India on November 10 reported a consolidated net loss of Rs 44.32 crore in the second quarter ended September 30 as it moved towards recovery from the coronavirus pandemic-induced disruptions.

The company had posted a consolidated net profit of Rs 71.30 crore in the corresponding quarter last fiscal, Bata India said in a regulatory filing. Revenue from operations stood at Rs 367.87 crore during the quarter under review as against Rs 721.96 crore in the year-ago quarter, the company said.

Since the reopening of the economy in June, the company has continued its multiple measures to ensure customer safety, consumer relevant communication, product availability and drive channel expansion, it said.

During the quarter, Bata India continued to optimise its retail network and look for cost savings across rentals and operations, manufacturing and drive efficiencies in its value chain.

"All the cost-focused initiatives that have been put in place across multiple work streams will continue to have long-term visible impact on the results, post-pandemic as well," it said. Commenting on the performance, Bata India Ltd CEO Sandeep Kataria said, "In this quarter, as all the stores opened-up gradually, we continued keeping safety of our customers and employees in mind."

The company focused on scaling up presence in online marketplaces with an expanded range, scaling its own channel bata.in and new digital channels such as 'Bata ChatShop', 'Bata Home Delivery' and 'Bata Store-on-Wheels' mobile kiosk to reach out to a wider customer base, he added.

On the outlook, he said, "As we inch back to a semblance of normalcy, we are mindful that this is going to be a slow and steady recovery. Therefore, innovation via agile product creation, introducing new emerging digital channels, expansion in tier 3-5 towns, and cost-saving digitalization will continue to be a priority."