Ailing Bata India restructuring

30 November 2004

Bata India of New Delhi is planning a second round of voluntary redundancies later this year. Stephen Davies, Bata India managing director, said the rationalisation of manpower was in tune with the firm's objective of returning to profitability in 2005. Bata India posted a loss of Rs26 crore (US$5.6 million) on net sales of Rs711 crore (US$155.2 million) in the financial year ended December 2003, having found it difficult to operate competitively with accumulated fixed costs and labour problems cited as key problems. Bata's current operating expenses are up to four times higher than those of competitors and the company continues to post losses this fiscal year. Davies stated that the firm was planning a rights issue towards year-end to partly fund their future investment plans. A capital restructuring exercise is currently underway and will focus on revamping the company's retail structure, in addition to consolidating and realigning manufacturing capacities. Bata's retail presence is being split between flagship, city and family stores, and 250 small-format unviable stores are in the process of being renovated. In addition to four manufacturing units in Batanagar, the firm has three units in Bangalore, and one each in Patna and Faridabad. Source: The Times of India

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