Bata India's innings on Monday began on a dismal note, with the scrip plunging 4.15% to Rs 26.55, following disappointing results by the company.
By 10:05 IST, the scrip of the leather and leather products company recorded volumes of 2,985 shares on BSE.
For Q1 ended 31 March 2003, the company increased losses to Rs 6.57 crore compared to a net loss of Rs 4.22 crore in the corresponding period last year. However, total income (net of excise) increased by 5.44% to Rs 144 crore (Rs 1.44 billion) from Rs 136.57 crore (Rs 1.36 billion) in MQ 2002.
For the last few quarters, the company has been continuously recording weak performances as a result of an overall slowdown in the industry due to lower consumer spending. Increasing domestic competition, particularly from the unorganised sector, has also been eroding into the company's market share. The company is finding it difficult to maintain its market share in a highly price sensitive Indian market, despite having strong brand recall. 97% of the company's revenues are from the domestic market while the remainder is from exports. Bata India is the biggest player in the Indian shoe market.
Bata India's two major problems are the high cost of production and low emphasis on marketing. The company may be able to address the first problem through outsourcing of products.
Bata's brand image has been restricted to that of a company that emphasises on utilitarian products more than trendy ones. Customers feel the company is lacking in innovation. Hence, their preference has shifted to other local brands.
However, the company, during FY 2001-02, tried to emerge as a more aggressive company by launching new products. Moreover, the products were aimed at mass marketing rather than the earlier emphasis on particular segments. The changed strategy is expected to bring in better sales. The company also intends on marketing international brands manufactured by its parent through its franchisees.
It has lately overhauled its marketing set-up into a four-tier retail structure that will be fed with products matching the customer profile of that area. Bata India is leveraging on its access to international technology to enhance its product development capabilities and add products to every price range. The company has identified the brands Power, North Star, Bubblegummers, Marie Claire and Hush Puppies for the top end of the market. The company is streamlining its distribution network to strengthen its focused marketing effort. At the top of the four-tier structure will be international brands like Nike and Reebok.
Bata India, the 51% subsidiary of Toranto-based Bata Shoe Organisation, remains the biggest player in the Indian shoe market, though its share in footfalls has been decreasing over the years.
BSE code: 500044
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