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  • 1. COMPANY ANALYSIS OF private LIMITED REGIONAL COLLEGE OF MANAGEMENT (AUTONOMOUS)Submitted under guidance of: Submitted By:SARMISTHA MISHRA (Prof.) SURAJ KR SATPATHY MBA (2011-13) REGD NO.-1106247218
  • 2. Company ProfileBata India Ltd is the largest footwear retailer and the leader in the footwearindustry in India. The company is engaged in the business of manufacturingand trading of footwear and accessories through their retail and wholesalenetwork. They are having their production facilities at Batanagar in WestBengal, Patna and Hathidah in Bihar, Faridabad in Haryana, Bangalore inKarnataka and Hosur in Tamilnadu. Their wholly owned subsidiaries includeBata Properties Ltd and Coastal Commercial & Exim Ltd. The companyoperates in two segments, namely footwear & accessories, and investmentsin joint venture for surplus property development. Their Footwear &Accessories segment is engaged in the business of manufacturing andtrading of footwear and accessories items through their retail and wholesalenetwork. Their Investment in joint venture for surplus property developmentsegment is involved in development of real estate at Batanagar. Theirproducts include leather footwear, rubber/canvas footwear and plasticfootwear. Bata India Ltd was incorporated in the year 1931 as Bata ShoeCompany Pvt Ltd in Konngar, West Bengal, which was then shifted toBatanagar. Batanagar was the first manufacturing facility in the Indian shoeindustry to receive the ISO 9001 certification. The company went public in1973. They changed their name to Bata India Ltd. Over the years, thecompany has established a leadership position in the footwear industry andis easily the most trusted name in branded footwear. The company hasentered into an agreement with Bata Ltd of Toronto, Canada for supply oftechnical know-how and services such as Footwear technology and design,brand development, product development, retailing and information systemsfor a period of ten years from January 1, 2001. The company bagged theRetailer of the year award for the year 2006 in the footwear category as apart of the Reid and Taylor Award for Retail Excellence which was presentedduring the Indian Retail Summit 2006. They received the countrys mostcoveted Retail Award at the 4th Images Retail Awards (IRA) 2007. Thecompany was honoured with Most Admired Brand of the year 2006-07 inFootwear category. They were rated as one of the Top 10 super brands inIndia and awarded Super Brands Award on April 12, 2007. In February 21,2008, they were given AMITY Corporate Excellence Award 2008. This awardwas given for Batas excellent performance and retail growth during 2007.The company entered into a joint development agreement with Calcutta
  • 3. Metropolitan Group Ltd for developing around 262 acres of land inBatanagar. The company formed a special purpose vehicle called RiverbankHoldings Pvt Ltd. The development of 262 acres was split into two parts, ITSEZ for 25 acres developed by Riverbank Holdings Pvt Ltd and the remaining237 acres will be done by the new company Riverbank Developers Pvt Ltd.In the year 2009, the company opened 69 new Bata stores, which are all inlarge format with an average of over 3000 square feet. They also renovated40 existing stores and closed down 73 stores which were in small format andunviable. In the year 2010, the company won the Consumer Awards 2010as Indias Most Preferred Retailer given by CNBC Awaaz. The companyopened 108 new large format stores across all major towns in India.Indian Footwear IndustryThe Footwear Industry is significant segment of the leather industry in India.India ranked second among the footwear producing countries next to China.The industry is labour intensive and is concentrated in the small and cottageindustry sectors. While leather shoes and uppers are concentrated in largescale units, the sandals and chappals are produced in the household andcottage sector. India produces more of gent‟s footwear while the world‟smajor production is in ladies footwear. In the case of sandals and chappals,use of non-leather material is prevalent in the domestic market.The major production centers in India are Chennai, Ranipet, Ambur in TamilNadu, Mumbai in Maharashtra, Kanpur, Jalandhar, Agra and Delhi.The Indian Footwear Industry is provided with institutional infrastructuresupport through premier institutions like central Leather research Institute,Chennai, Footwear Design & Development Institute, Noida, National Instituteof Fashion Technology, New Delhi, etc in the areas of technologicaldevelopment, design & product development and human resourcedevelopment.The availability of abandunt raw material base, large domestic market andthe opportunity to cater to world markets makes India an attractivedestination for technology and investements.
  • 4. Company MilestonesThe company milestones achieved by the company are given in the tablebelow:Timeline Milestone / Event - Enters into retailing alliance with Lee Cooper2003-2009 - Unveils new flagship store in Mumbai - Sets up new flagship store in Thiruvananthpuram - Installs injection moulded plant - Sets up export oriented unit at Hosur in Tamil Nadu1990-1999 - Ties-up with Nike for marketing the latter‟s products through its retail outlet - Launches new ladies range „Sundrop‟ - Goes public, listed shares on BSE and NSE - Enters into agreement with Adidas for manufacture and marketing of sports goods and sportswear in India1973-1988 - Launches marketing of `Star clothings designed by Murjani International, New York, U.S.A. and sourced through Inmark Brands Pvt. Ltd. - Introduces a new brand “Tigre” - Sets up machinery department to manufacture shoe making machine1942-1952 - Sets up factory in Patna, Bihar - Sets up factory in Faridabad - Incorporated at Kolkata1931-1937 - Tanning introduced at the new factory at Batanagar in Kolkata
  • 5. Vision & Mission  Vision:- Vision is that igniting spark that can inspire and energise people to do better. The focus of vision is to reach out hungrily for the future and drag it into the present. Bata India today wishes to reposition itself as a market driven, fashionconscious lifestyle. Focus on a variety of customer groups.  Mission:-A mission statement articulates the philosophy of the company with respect to the business in specific and society in general. Once the mission statement of the company is finalized and adapted, it provides a readymade guideline to employees of the organization about its principles, policies and practices. Bata will provide its products and services to all the age groups in thecommunity. Will also provide the finest quality through customerinvolvement.Organization StructureEmployees of the Company are categorized along the following grades, indescending heirachical order:• Directors• Senior Managers (Senior Vice President, Vice President, General Manager)• Middle Managers• Junior Managers• Selling personnel• Shop Managers• Shop EmployeesAdditionally, the Company employs direct and indirect workmen on itsfactory sites. The number of permanent employees currently on the payrollof the Company is 9,969 as on January 31, 2005.
  • 6. GeographiesBata has a worldwide reach, with operations across 5continents managed by 4 regional meaningful business units (MBUs). Eachunit benefits from synergies specific to their environment, such as productdevelopment, sourcing or marketing support. Each MBU is entrepreneurial innature, and can quickly adapt to changes in the market place and seizepotential growth opportunities.Bata India is the largest company for the Bata Shoe Organization in terms ofsales pairs and the second largest in terms of revenues. With 1250 storesacross the country, it also has the widest retail network within the BSO.Kolkata is located in eastern India in the Ganges Delta at an elevationranging between 1.5 to 9 metres. Kolkata has a tropical wet-and-dryclimate. The annual mean temperature is 26.8 °C (80 °F); monthly meantemperatures range from 19 °C to 30 °C (67 °F to 86 °F). Summers are hotand humid with temperatures in the low 30s and during dry spells themaximum temperatures often exceed 40 °C (104 °F) during May and June.Winter tends to last for only about two and a half months, with seasonallows dipping to 12 °C – 14 °C (54 °F – 57 °F) between December andJanuary. Rains brought by the Bay of Bengal branch of South-West monsoonlash the city between June and September and supplies the city with most ofits annual rainfall of 1,582 mm. The highest rainfall occurs during themonsoon in August (306 mm).SubsidiariesBata India Ltd has 2 subsidiaries, namely –  Bata Properties Ltd.:- BPL is a wholly owned subsidiary of Bata. BPL was originally incorporated on August 14, 1987 as Chandil Properties Private Limited. The Companyís name was subsequently changed from Chandil Properties Private Limited to Bata Properties Limited, consequent to which the Registrar of Companies, West Bengal issued a fresh Certificate of Incorporation dated September 20, 1990. The main object with which BPL was incorporated was to carry on the business as dealers, owners and investors in land and building.
  • 7. In the year 1990, the Company and BPL entered into a Scheme of Arrangement sanctioned by the Calcutta High Court with effect from July 1, 1990, whereby the Real Estate Division of the Company consisting of properties situated at Calcutta, Raigunj, New Delhi, Agra and Kanpur were transferred to BPL. BPL, as consideration for the transfer, issued 5,250,000 equity shares to the Company of Rs. 10/- each, credited as fully paid-up. The said properties were transferred to BPL for better development and management of the property. By another Scheme of Arrangement sanctioned by the Calcutta High Court with effect from November 1, 1991, whereby further properties belonging to the Company and situated at Uttar Pradesh, Jaipur, Chandausi, Calcutta and Jabalpur, were transferred to BPL. BPL, as consideration for the transfer, issued 3,600,000 equity shares to the Company of Rs. 10/- each, credited as fully paid-up. 41 BPLís subsequently reduced its share capital from Rs. 88,510,000/- consisting of 8,851,000 equity shares of Rs. 10/- each to Rs. 48,510,000/- consisting of 4,851,000 equity shares of Rs. 10/- each. This reduction was sanctioned by the Calcutta High Court vide its Order dated September 18, 1995. Currently, BPL is engaged in the business of development, improving, and effectively utilising the properties of Bata in a planned manner and to acquire further properties for development of retail business of Bata throughout India. The Board of Directors of BPL as on January 31, 2005 consists of: • Mr. S. J. Davies; • Mr. Pradip Kumar Nag; and • Mr. Hemant Sultania Coastal Commercial & Exim Ltd.:- CCEL was incorporated as Coastal Commercial & Exim Private Limited on October 11, 1991. The companyís name was changed to Coastal Commercial & Exim Limited, for which the Registrar of Companies, West Bengal issued a Fresh Certificate of Incorporation dated September 6, 2001. The main objects of CCEL is, inter alia, to carry on business as Exporters, Importers, buyers, traders, suppliers, and merchants.
  • 8. The Board of Directors of CCEL as on January 31, 2005 consists of: Mr. Pradip Kumar Nag, Chairman; • Mr. M. J .Z. Mowla; • Mr. Hemant SultaniaProducts of BATA India Limited  Leather Footwear  Rubber / Canvas Footwear  Plastic Footwear  Accessories, Garment & Others  Bags and Luggages  Belts
  • 9. Financial condition of Bata India LtdYear over year, Bata India Ltd. has been able to grow revenues from 12.8Bto 15.5B. Most impressively, the company has been able to reduce thepercentage of sales devoted to selling, general and administrative costs from32.28% to 21.40%. This was a driver that led to a bottom line growth from883.7M to 2.6B .P/E RatioThe PE ratio is much more sensitive to changes in expected growth rateswhen interest rates are low than when they are high. The reason is simple.Growth produces cash flows in the future and the present value of thesecash flows is much smaller at high interest rates. Consequently the effect ofchanges in the growth rate on the present value tend to be smaller.Operating ProfitDuring the year 2010 your Company achieved a total turnover of Rs.12,770.9 million as compared to Rs.11,125.9 million in 2009, which reflectsa growth of around 15%.Company has undergone a transformation in all areas of its businesswhether it is sales, profitability, shoe line, visibility and the ambience of itsstores. In the last 4 years, 72% of the stores have been renovated.Due to the continuous and ongoing process of restructuring being adoptedby your Company in all areas of its operations, there has been improvementin manufacturing, changes in sourcing, credit management, retailrestructuring, labour union - management relationship, retail expansionprograms, training and development, team building, internal controls,borrowings, working capital management, business processes, corporategovernance, de-risking the business of the Company and now introduction ofthe Home Delivery Service of shoes for the convenience, comfort and choiceof our valued customers. Using this service, customers can now place orders
  • 10. for any footwear which they are unable to find in a Bata store and get ithome delivered through courier with no extra cost.Earnings Per ShareThe Earning per Share (EPS) (Basic and Diluted) of your Company hasincreased substantially by 41.87% (from Rs.10.46 in 2010 to Rs.14.84 in2011).Company is out of Bank Borrowings since April 2011 as against Rs.146.5million at the end of 2009, despite the entire capital expenditure and VRSfunded through internal accruals.Quick RatioAn indicator of a companys short-term liquidity. The quick ratio measures acompanys ability to meet its short-term obligations with its most liquidassets. The higher the quick ratio, the better the position of the company.The quick ratio is calculated as:Also known as the "acid-test ratio" or the "quick assets ratio".Current RatioA liquidity ratio that measures a companys ability to pay short-termobligations.The Current Ratio formula is:Also known as "liquidity ratio", "cash asset ratio" and "cash ratio".
  • 11. Debt/Equity RatioA measure of a companys financial leverage calculated by dividing its totalliabilities by stockholders equity. It indicates what proportion of equity anddebt the company is using to finance its assets.Sometimes only interest-bearing, long-term debt is used instead of totalLiabilities in the calculation.Also known as the Personal Debt/Equity Ratio, this ratio can be applied topersonal financial statements as well as corporate ones. Particulars Dec 2011 Dec 2010 Dec 2009 Dec 2008 Dec 2007 Operational & Financial Ratios Earnings Per Share (Rs) 35.14 14.84 10.46 9.45 7.38 Tax Rate(%) 29.29 33.32 32.95 15.46 7.89 Margin Ratios Core EBITDA Margin(%) 15.00 13.03 11.44 8.81 7.19 EBIT Margin(%) 21.03 11.80 9.88 8.21 6.97 Pre Tax Margin(%) 20.41 11.20 9.01 7.10 5.78 PAT Margin (%) 14.43 7.47 6.04 6.00 5.33 Cash Profit Margin (%) 17.06 10.01 8.55 7.88 7.12 Financial Stability Ratios Total Debt/Equity(x) 0.04 0.04 0.08 0.18 0.25 Current Ratio(x) 1.84 1.53 1.72 1.71 1.77 Quick Ratio(x) 0.84 0.78 0.64 0.53 0.46 Total Debt/Mcap(x) 0.01 0.01 0.02 0.06 0.03
  • 12. Bata India Ltd - Annual Profit Loss All Amount Are In Rs.(Crore) 2008 Period 2011 2010 2009 991.63 Revenue 1,553.72 1,295.60 1,094.84 12.84 Other Income 119.73 15.25 10.65 455.33 Material Expenses 255.17 595.66 483.07 Manufacturing Expenses - 32.37 32.91 29.98 Employee Expenses 185.85 176.83 164.75 170.12 Operating Profit 361.37 183.15 137.88 102.08 Depreciation 41.10 32.51 27.92 19.00 Interest 0.87 7.64 9.70 11.24 Tax 93.56 54.64 39.50 24.75 Extra Ordinary Income - -0.19 -0.17 0.16 Net Profit 225.84 95.35 67.23 60.74 Dividend Rate - 25.71% 19.28% 16.07%Ratios Dec 10 Dec 09 Dec 08 Dec 07Per share ratiosAdjusted EPS (Rs) 14.85 11.20 9.57 6.81Adjusted cash EPS (Rs) 19.90 15.54 12.53 9.30Reported EPS (Rs) 14.84 10.46 9.45 7.38Reported cash EPS (Rs) 19.90 14.81 12.41 9.87
  • 13. Dec 10 Dec 09 Dec 08 Dec 07Dividend per share 4.00 3.00 2.50 2.00Operating profit per share (Rs) 28.29 22.92 15.95 11.24Book value (excl rev res) per share (Rs) 56.57 46.15 38.25 32.72Book value (incl rev res) per share (Rs.) 61.97 51.78 44.12 38.93Net operating income per share (Rs) 195.77 170.58 154.05 135.03Free reserves per share (Rs) 46.57 36.15 28.25 22.72Profitability ratiosOperating margin (%) 14.45 13.43 10.35 8.32Gross profit margin (%) 11.86 10.89 8.44 6.49Net profit margin (%) 7.50 6.09 6.09 5.43Adjusted cash margin (%) 10.06 9.05 8.07 6.84Adjusted return on net worth (%) 26.24 24.26 25.02 20.80Reported return on net worth (%) 26.22 22.66 24.71 22.56Return on long term funds (%) 43.00 41.02 34.29 28.11Leverage ratiosLong term debt / Equity 0.03 0.03 0.03 0.03Total debt/equity 0.03 0.08 0.17 0.24Owners fund as % of total source 96.34 92.24 85.02 80.32Fixed assets turnover ratio 3.01 2.93 2.83 2.67
  • 14. Dec 10 Dec 09 Dec 08 Dec 07Liquidity ratiosCurrent ratio 1.60 1.82 1.78 1.78Current ratio (inc. st loans) 1.60 1.63 1.38 1.28Quick ratio 0.77 0.64 0.53 0.45Inventory turnover ratio 4.28 4.03 3.47 2.95Payout ratiosDividend payout ratio (net profit) 31.35 33.55 30.94 31.69Dividend payout ratio (cash profit) 23.38 23.70 23.57 23.69Earning retention ratio 68.66 68.66 69.45 65.64Cash earnings retention ratio 76.63 77.43 76.66 74.85Coverage ratiosAdjusted cash flow time total debt 0.10 0.25 0.55 0.86Financial charges coverage ratio 10.13 7.40 6.29 5.71Fin. charges cov.ratio (post tax) 7.65 5.56 5.61 5.69Component ratiosMaterial cost component (% earnings) 47.57 44.28 46.33 50.89Selling cost Component 6.32 5.81 6.12 5.46Exports as percent of total sales 0.93 0.70 1.01 1.08Import comp. in raw mat. consumed 2.30 1.95 3.43 3.34Long term assets / total Assets 0.17 0.19 0.18 0.16
  • 15. Revenue Latest Financial Figures (Figures in Rs. Crores)ET 500 Rank(2011) 409Industry Leather/Synthetic ProductsTurnover 1520.54Profit after Tax(PAT) 205.47MCAP (Market 4342.22Capitalization)Assets 412.01Bata India has 8 globally popular brands. The company has also tiedup with the giant footwear company Adidas, to set up a manufacturingunit for shoes and apparels in India. Further, Bata India Ltd. and theinternational footwear giant, Reebok have announced an agreement toforay into retailing business jointly.Bata India registered net sales 1826.70 million for the quarter endedMarch, 2007 and the companys net profit stood at ` 53.50 million forthe same period.
  • 16. CSR initiatives :Saving the Ganga is a project that has made a significant contribution in thisdirection. Bata at a considerable cost has ensured that the effluents from thetanneries are treated in a state-of-the-art effluent treatment plants so thatthey do not pollute the river at Batanagar and Mokamehghat.Bata was one of the first companies to come forward to preserve nature,when it joined hands with World Wide Fund (WWF) to protect the naturalenvironment and its wildlife. Through an arrangement with the apex body ofWWF, a part of the sale proceeds from "Power WWF" collection T-shirts weredonated to the WWF.Afforestation programme along with "Save the Ganga Project" brought manylaurels and kudos to our Mokamehghat Tannery. Planting of trees is routinelycarried out at all Bata Units.The factory at Bangalore was considered thebest maintained garden in Peenya Industrial Area.Market scenarioThe company enjoys the highest market share in India and this is evidentfrom the fact that the total retail presence of the company currently is morethan thrice that of its closest competitor (Liberty: 381 stores).Bata has over 15% market share in Organized Retail market and around6.5% share in Unorganized retail.
  • 17. Top 5 CompetitiorsName Last Price Market Cap. Sales Net Profit Total Assets (Rs. cr.) TurnoverBata India 858.95 5,519.94 1,266.43 95.35 412.01Relaxo Footwear 313.80 376.60 557.76 37.69 317.13Mirza Intl 18.80 174.29 474.38 39.18 309.61Liberty Shoes 97.15 165.54 298.14 10.64 241.63Bhartiya Inter 52.15 54.57 167.33 5.54 180.13Crew B.O.S. 25.80 36.10 621.01 22.43 447.96SWOT AnalysisStrengths  Largest footwear retailer in India.  Largest market share in the organized footwear segment.  Strong Brand Image.Weaknesses  ROE decreased over the last one year due to a threefold increase in tax outgo.Opportunities  The nations consumption of leather products is expected to grow at around 10% per annum, which will be largely driven by the rising disposable income and the increased preference for leather footwear.  The unorganized segment constitutes 80% of this market, indicating a significant marketing opportunity for organized players.  The per capita consumption is 1.1pairs per annum, opportunity for increase in consumption.Threats  Increased competition from leading multinational players in the sports segment.
  • 18.  Threat from non-specialist retailers like apparel retailers diversifying into footwear and discount hypermarkets and retailers introducing and promoting their own brands (DoBs) at competitive prices.Recent Developments05-MAR-12 :- Credit rating agency, ICRA has reaffirmed the long-termrating assigned to Rs.56 crore1 fund based / non-fund based limits of BataIndia (Bata) at AA. The outlook on the rating is positive.01-MAR-12 :- Bata India has posted consolidated net profit of Rs 2,588.59million for the year ended December 31, 2011 as compared to Rs 883.730million for the year ended December 31, 2010, representing an increase of2.92times.31-OCT-11 :- Bata India has posted a net profit of Rs 304.23 million for thequarter ended Sept. 30, 2011 as compared to Rs 207.24 million for thequarter ended Sept. 30, 2010, registering an increase of 46.80%.29-JUL-11 :- Bata India has posted a net profit of Rs 409.89 million for thequarter ended June 30, 2011 as compared to Rs 259.05 million for thequarter ended June 30, 2010 representing rise of 58.23%.29-JUN-11 :- Bata India has decided to directly move into the rural marketfor the first time for volume growth. The outgoing chairman of the company,P. M. Sinha, told shareholders at the 78 {+t} {+h} AGM that an extensivemarket research report was ready. ``We have not penetrated rural India sofar.27-OCT-10 :- Bata India has registered rise of 57.57% in net profit for thequarter ended Sep.30, 2010. Its profit for the current quarter stood at Rs207.2 million against Rs 131.5 million for the same quarter a year ago.29-APR-10 :- Bata India, the largest footwear retailer and the leader in thefootwear industry in India, announced its financial results for the first
  • 19. quarter of the year 2010. The company continued with its strong growthmomentum by posting an impressive 38.7% growth in net profit at Rs 143.3million as against net profit of Rs 103.3 million in the same period last year.The net sales of the company grew 11.2% at Rs 2591.5 million as againstnet sales of Rs 2330.3 million in the same period last year.17-MAR-10 :- Credit rating agency, ICRA has upgraded the long-term ratingassigned to Rs 1.15 billion fund based / non-fund based limits of Bata India(Bata) from LAA- to LAA.Future PlansDuring 2010 Company has hired 71 Middle and Senior level Executives for itsvarious functional areas and people moving out, retiring etc. had beenreplaced with professionals with better qualification and experience.Creating bench strength and building up capability for future growth  Executive Development plan:- For the second consecutive year, Company pursued its aim of nurturing and developing new talent for various responsibilities by successfully training its Executive Trainees. 13 executive trainee have been hired from various retail management schools who have gone through 9 months Executive Development Plan (EDP) which was initiated in the year 2009.Total 13 executive trainees, who successfully completed their training, havebeen placed as District Managers across chains in retail operations in 2010.Many more executives have been hired during 2010 for retail operation,merchandising and whole sale, etc.  Graduate Engineers Development Plan:- Company has also initiated process of hiring and training engineers for its manufacturing division. In the first batch of Graduate Engineer Trainees (GETs) a total of 11
  • 20. graduate engineers were inducted at Batanagar. The one year durationtraining program is currently underway. During the initial phase oftheir training of 4 months at Batanagar, the trainees have been placedto different units to take up On-the-Job training in their final phase oftraining.