Bata India: Labour ‘pangs’ - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Bata India: Labour ‘pangs’

Sep 22, 2000

Bata India, one of India’s largest shoemakers is in trouble again. The company’s fortunes seem to be up one year and down the very next. After almost being wiped out, Bata turned the corner in FY97 thanks to a new management, aggressive product launches and a shift towards its traditional mass market offering high value affordable products. At present, it derives over 70% of its revenues from retail outlets while the balance comes from the wholesale segment.The company had earlier tried to enter the high end market with brands like Hush Puppies, but could not make a mark. Its also used its retail network to market high end apparel products such as ties, T-shirts, Jackets etc. with little success.

(Rs m)1HFY001HFY01Change
Sales4,061 3,900 -4.0%
Other Income 5 4 -13.3%
Expenditure 3,690 3,632 -1.6%
Operating Profit (EBDIT) 371 268 -27.8%
Operating Profit Margin (%)9.1%6.9% 
Interest 35 41 16.6%
Depreciation 64 67 5.2%
Profit before Tax 277 164 -40.7%
Tax 104 63 -39.4%
Profit after Tax/(Loss) 174 102 -41.5%
Net profit margin (%)4.3%2.6% 
Earnings per share*6.743.96 
* (annualised)   
The current year has given Bata nothing to cheer about. During the first of the current financial year (1HFY01) the company’s turnover recorded a marginal decline of 4%, but higher interest and depreciation provisions pruned the company’s bottomline by 42%.

As if these problems were not enough, its traditional problems with the workforce erupted again, this time in its Calcutta unit. While Bata is struggling to cope with its high debt burden and nagging employee disruptions, international entrants like Reebok, Nike and Tuffs along with Indian brands like Action are eating into Bata’s market with aggressive new launches and sleek positioning at retail outlets.

The stock currently trades at a P/e multiple of 13 times its estimated FY2001 earnings. Historically, the stock has traded at a P/e ratio of 45 to 50 times.

Bata is trying hard to prune its workforce through a VRS. It is also retiring high cost debts to improve the profitability of the company. But until it settles issues with its workforce it may find it hard to sustain its growth.

Equitymaster requests your view! Post a comment on "Bata India: Labour ‘pangs’". Click here!


More Views on News

BATA INDIA 2020-21 Annual Report Analysis (Annual Result Update)

Aug 10, 2021 | Updated on Aug 10, 2021

Here's an analysis of the annual report of BATA INDIA for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of BATA INDIA. Also includes updates on the valuation of BATA INDIA.

Bata India Rises 6% Despite Fall in Net Profit (Views On News)

Jun 10, 2021

Here's why shares of the company rose even as profits declined 23.3%.

Adani Wilmar IPO to Hit the Market Soon. Should you Apply? (Views On News)

Nov 29, 2021

The parent company of the brand Fortune is set to raise Rs 45 bn from the market.

What Happens if ITC Hives off ITC Infotech? (Views On News)

Nov 20, 2021

The cigarette to hotel conglomerate is reportedly mulling the demerger of its software business at a valuation of around Rs 250 bn.

What Sparked an 8% Rally in ITC Shares Today? (Views On News)

Sep 16, 2021

ITC did not participate in the rally after the second wave and continued to underperform its peers. Is this about to change?

More Views on News

Most Popular

10 Indian Companies with the Fastest Growth in Dividend Payouts... (Views On News)

Jan 10, 2022

These companies have been consistently paying higher dividends for several years.

Tata Steel vs SAIL: Which Stock is Better? (Views On News)

Jan 13, 2022

With government initiatives set to boost the steel sector, find out who has a better chance of coming out on top.

Watch Out for these 4 Indian Companies Betting Big on EV Supply Chain (Views On News)

Jan 11, 2022

The upside in supply chain players could be huge but a delay in the transition to EVs, or any policy related hiccups could end the momentum.

Tech Mahindra's CTC Acquisition: Too Expensive? (Views On News)

Jan 18, 2022

Tech Mahindra's acquisition of European IT-company fails to excite investors.

Time to Buy Energy Stocks (Fast Profits Daily)

Jan 14, 2022

Energy is a sector that looks set to take off. It's time to get in.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Jan 21, 2022 (Close)


  • Track your investment in BATA INDIA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks