A SUMMER TRAINING PROJECT REPORT

ON

“STRATEGIC ANALYSIS OF BATA INDIA LIMITED”

Submitted in partial fulfillment of the requirement of BBA Program of School of

Management, ITM University, Gurgaon

ACADEMIC SESSION

2014-2015

COMPANY GUIDE FACULTY Guide

MR. Love Kumar Taneja Dr. Anshu Agarwal

SUBMITTED BY

SMRITI NAGPAL

12BBA031

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 ACKNOWLEDGEMENT
This project comes out to be a great source of learning and experiences. A lot of efforts have been
put by various people to make this project a success. This has greatly enhanced my knowledge
about Bata. I gratefully acknowledge my indebtedness to Mrs. Anshu Aggarwal for her time and
valuable efforts. She is constantly encouraged me right from the selection of the project to final
preparation of my report. She has been a constant source of knowledge, information, help and
motivation for me through her in-depth knowledge and reflection.

I express my sincere thanks to Bata for giving me an opportunity to work with through this project.

With Regards,

Smriti Nagpal

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Bata India limited
Saima enterprises

56L Upper ground floor ,new colony

Gurgaon 122001

Company Certificate
This is to certify that Ms. Smriti Nagpal has visitrd our organisation

And has collected relevant information for her project “strategy analysis”

of Bata footwear in gurgaon.

We hereby certified that the information given in this project is relevant.

Mr. Love
kumar taneja

(Bran
manager pvt ltd)

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TABLE OF CONTENTS

1 INTRODUCTION
1.1 Industry Profile
1.2 Company Profile
1.3 Conceptual Framework of the Study

2 JOB PROFILE
2.1 Job Title
2.2 Job Duties and Responsibilities

3 RESEARCH METHODOLOGIES
3.1 Objectives of the Study
3.2 Scope of Study
3.3 Data Collection Methods
3.4 Sampling Design

4 DATA ANALYSIS AND INTERPRETATION

5 Key learning’s AND RECOM MENDATIONS

5.1 Issues/Challenges Faced

5.2 Conclusion
5.3 Recommendations
5.4 Limitations of the Study
5.5 Scope for Further Research

REFERENCES

ANNEXURE

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 CHAPTER1: INTRODUCTION

1.1 OVERVIEW OF Indian Footwear Industry

The Footwear Industry is a significant segment of the Leather Industry in India. India ranks second
among the footwear producing countries next to China. The industry is labour intensive and is
concentrated in the small and cottage industry sectors. While leather shoes and uppers are
concentrated in large scale units, the sandals and Chappals are produced in the household and
cottage sector. India produces more of gents’ footwear while the world’s major production is in
ladies footwear. In the case of Chappals and sandals, use of non-leather material is prevalent in the
domestic market.

The major production centers India are Chennai, Ranipet, Ambur in Tamil Nadu, , Mumbai in
Maharashtra, Kanpur in U.P. , Jalandhar in Punjab, Agra and Delhi.

The following table indicates concentration of units in various parts of the

country:

Region Large & Medium Scale SSI Household

Tamil Nadu 64 31 7

Delhi& up North 4 8 2

Agra, Kanpur 9 34 14

Calcutta 1 3 19

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 Bangalore 6 3 4

Mumbai 3 11

Others 13 10 3

The estimated annual footwear production capacity in 1999 is nearly 1736 million pairs (776
million pairs of leather footwear and 960 million pairs of non-leather footwear).

Region-wise share of total estimated capacities is as follows:

Non-leather Leather ShoeLeather Non Leather

Region Leather Shoes
Shoes Uppers Sandals Sandals

Percentage
Tamil Nadu 26 5 54 1 0

Delhi& up North 10 77 4 1 60

Agra, Kanpur 45 0 32 62 0

Calcutta 12 0 2 3 0

Bangalore 3 3 4 0 0

Mumbai 4 2 1 32 0

Others 0 13 3 1 40

Total 100 100 100 100 100

Shoes manufactured in India wear brand names like Florham, Gabor, Clarks, Salamander and St.
Michael’s. As part of its effort to play a lead role in the global trade, the Indian leather industry is
focusing on key deliverables of innovative design, consistently superior quality and unfailing
delivery schedules.

India in itself has a huge domestic market, which is largely untapped.

The Indian footwear industry is provided with institutional infrastructure support through premier
institutions like Central Leather Research Institute, Chennai, Footwear Design & Development
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Institute, Noida, National Institute of Fashion Technology, New Delhi, etc in the areas of
technological development, design and product development and human resource development.

The availability of abundant raw material base, large domestic market and the opportunity to cater
to world markets makes India an attractive destination for technology and investments.

Production capacity of Shoe Industry

The leather industry is spread in different segments, namely, tanning & finishing, footwear &
footwear components, leather garments, leather goods including saddler & harness, etc.

The estimated production capacity in different segments is as under

 Hides:64 million pieces

 Skins:166 million pieces

Footwear & Footwear Components

 Shoes:100 million pairs

 Leather shoe uppers:78 million pairs

 Non-leather shoes/chap pals etc:125 million pairs

 Leather Garments:6 million pieces

 Leather Products:70 million pieces

 Industrial Gloves:40 million pairs

 Saddlery:6000 pieces

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The major production centers for leather and leather products are located at Chennai, Amber, Ran
pet, Vaniyambadi, Trihi, and Dindigul in Tamil Nadu, Calcutta in West Bengal, Kanpur in Uttar
Pradesh, Jalandhar in Punjab, Bangalore in Karnataka, Delhi and Hyderabad in Andhra Pradesh.

Raw material supplies:

There exists a large raw material base. This is on account of population of 194 million cattle, 70
million buffaloes, 95 million goats. According to the latest census, India ranks first among the
major livestock holding countries in the world. In respect of sheep with 48 million sheep’s, it claims
the sixth position. These four species provide the basic raw material for the leather industry.

The annual availability of 166 million pieces of hides and skins is the main strength of the industry.
This is expected to go up to 218 million pieces by the end of year 2000. Some of the goat/calf/sheep
skins available in India are regarded as specialty products commanding a good market. Abundance
of traditional skills in training, finishing and manufacturing downstream products and relatively low
wage rates are the two other factors of comparative advantage for India.

Export and Import overview

India's export of Leather & Leather

Products has reached US $ 3.47 billion in
dollar terms and Rs.14, 000 crore in rupee
terms. In dollar terms, there has been an
export growth of 13.67% and in rupee
termsl.13%Footwear alone holds a major
share of 42.44% in India's total leather
products export trade. As against the
export target of US $ 3042 million for the
financial year 2007-08, the achievement was 114.32%
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Footwear is the engine of growth for the entire Indian leather industry and India is the second
largest global producer of footwear after China, accounting for 14% of global footwear production.
Of 14.52 billion Pairs.

India produces 2065 million pairs of Different Categories of Footwear (Leather Footwear 909
million pairs, Leather Shoe uppers 100 million pairs and Non-leather footwear 1056 million pairs)

India exports about 115 million pairs. Thus, nearly 95% of its production goes to meet its own
domestic demand.

Footwear exported from India are Dress Shoes, Casuals, Moccasins, Sport Shoes, Hierarchies,
Sandals, Ballerinas, Boots, Sandals and Chap pals made of rubber, plastic, P.V.C. and other
materials.

Acme, Clarks, Coleman, Deichmann, Ecco, Elefanten, Florsheim,

MNC Brands sourced : from
Gabor, Haley, Hush Puppies, Double H, Justin, Marks & Spencer,
India
Nautica, Nike, Nunn.

MNC Brands Sold in India: Bally, Clarks, Hush Puppies, Lee cooper, Lloyd,
Marks Spencer, Nike, Nine West, New Balance, Reebok, Stacy Adams

Indian Brands sold in India: Red Tape, Bata, Liberty, Khakis, Lakhani, and Action

 Nearly 75% of India’s Export of Footwear is to the European Countries and the USA.

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  The Indian Footwear Industry provides employment opportunities to a total of 1.1 million
people, mostly from the weaker sections of the society. Out of this, about 0.2 million are
employed in the organized sector, 40% of who are women. Remaining 0.9 million people
are engaged in unorganized footwear sector like rural artisans, cottage and household units
etc.

 The Footwear Sector is now de-licensed and de-reserved, paving the way for expansion of
capacities on modern lines with state-of-the-art machinery. To further assist this process, the
Government has permitted 100% Foreign Direct Investment through the automatic route for
the Footwear Sector.

Footwear export has increased from US$40.15 million in 1977-78 to US$ 1475.83 million in 2007-
08

Chart showing Global Import of footwear

Vs. Indian Export of Footwear

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India’s Exports of Footwear – Country-wise Share in Total Exports (2007-08) Source: DGCI& S

The European Union and the USA are the major markets for Indian Footwear accounting for
79.95% and 9.22% share respectively in India’s total footwear export. The major markets for Indian
Footwear are Germany 16.66%, UK 16.31%, Italy 15.32%, USA 9.22%, France 7.81%, Spain
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5.10%, Netherlands 4.91%, Portugal 2.50%, UAE 2.48% and Denmark 1.18%. These 10 countries
together accounts for nearly 81.49% of India’s total leather products export.

NOTE:- 20% of total Indian shoe production come from Bata. i.e about 8crorte pairs.

ROLE OF GOVERNMENT IN SHOE INDUSTRY IN INDIA

Jairam Ramesh Minister of state for Commerce has announced Rs.1.6-billion (Rs.160-crore)
package to boost the local shoe industry, but the state government, chief minister opposed this.
Ramesh made the announcement on Saturday when he was inaugurating an international fair on
leather, footwear components and technology at the Kalakriti Grounds near the TajMahal.

The package comprises of Rs.600-million Leather Park, Rs.200-million footwear design

development centre, Rs.100-million design studio, a testing laboratory and a permanent exhibition
ground to be developed on investment of Rs.500-600 million, on similar to PragatiMaidan
exhibition in New Delhi.

Local shoe manufacturers have been asked to look for land. But there’s a problem the land for the
projects has to be released by the state’s ruling party (which is the Congress’s opposition party).

Agra’s old shoe industry directly and indirectly supports 100,000 families, mostly from the dalit
community. Mayawati of BSP opposed to Ramesh of Congress Party that heads the United
Progressive Alliance (UPA).
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According to shoe industry sources, Mayawati won’t be in a hurry to release land for any of the
projects announced.

But the industry believes once the schemes starts, exports could reach Rs.30 billion (Rs.3000 crore)
from the present level of around Rs.8 billion (Rs.800 crore).

More than 200 national and international components and raw materials manufacturers have put up
their stalls at the exhibition.

Design-cum-Resource Centre for Footwear & Leather Industry:

Leather goodsand shoes as well as items of fur are being manufactured in the Small Scale
Industry/Tiny sector traditionally in Srinagar and Jammu. The Central Government would make an
initial contribution of Rs. 1.00 crore as grant for setting up a Design/Resource Centre and National
Leather Development Programme (NLDP) will provide assistance for machinery, training and
salaries of professionals. Under the National Leather Development Prograramme, exclusive
assistance will be provided to market finished leather products of the artisans of the State in the
form of buyer seller meets and exhibitions.

RAW MATERIAL FOR SHOES

 Synthetic leather
 Shoe leather
 PU leather
 Air blown PVC soles

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  PU welted sole
 TPR soles for men
 PU sleeper sole
 PVC gents sole
 PU shoe sole
 Emulsion polymers (latexes)
 Pell ethane thermoplastic polyurethane elastomers
 Polyurethanes
 Vocalist polyurethane system
 Microfiber leath

HISTORY

All about Bata:

Bata India is the largest retailer and leading manufacturer of footwear in India and is a part of the
Bata Shoe Organization.

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.

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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 1250 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. And the new face of Bata India is now
visible to the industry as well as its customers. Today, backed by a brand perception of experience,
the company is working towards positioning itself as a vibrant and contemporary young brand. It
has significantly transformed its retail formats to become more lifestyle-oriented, which has helped
change consumer perceptions to a large extent.

Key Milestones:

Date/Year Event

1894 The Bata Shoe Organization was founded by Tomas J. Bata, a ninth
generation shoe maker

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1931 The Company was incorporated in India.

1933 The production of footwear commenced in rented premises at Konnagar, a

few miles away from Kolkata, where for the first time rubber and canvas
shoes were manufactured in India.

October 28, The foundation stone was laid on land purchased from the Port
1934 Commissioners and small landowners in the outskirts of Kolkata and the
first manufacturing unit were set up, at a place now known at Batanagar.
The factory shifted from Konnagar to Batanagar
1936 The construction work at the Batanagar factory was completed, and factory
operation shifted from Konnagar to Batanagar. Towards the end of 1936,
the factory produced leather footwear for the first time

1937 Batanagar tannery became operational towards the end of 1937

1939 The Batanagar factory was complete in terms of every activity related to
Footwear. The Batanagar township grew to become self-sufficient with the
acquisition of more land and the erection of schools, places of worship,
Hospitals, entertainment and recreational centers.

1940-45. During the World War II the factory’s production was geared to meet war
Requirements.

1942 A footwear manufacture plant, a machinery department was set up at

Batanagar, which produced the first India-made major shoe machine.
Simultaneously, several auxiliary departments were started. This was
Followed by the setting up of the factory at Bataganj, Bihar.

1950 Bata successfully launched the brand .Hawaii

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1951 The rubber/canvas factory was set-up at Faridabad, Haryana.

1952 One of Asia’s largest tanneries was set-up at Mokemehghat, Bihar.

1988 The Bata factory was set-up in Peenya, Bangalore

1994 The Company’s factory at Hosur in the State of Tamil Nadu became
operational, which was originally an Export Oriented Unit, but now caters
to the domestic Indian market

1993 Batanagar factory became the first Indian shoe-manufacturing unit to

receive the ISO 9001 certification.

Our Values

 Constant innovation in design and product development

 Superior customer service

 Excellence in operational and commercial execution

 Entrepreneurial spirit and passion to win

 Teamwork in international environment

 Trust and respect for our employees

 Adding value to the community

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  Delivering on our commitment to shareholders

Our commitments

 Your Purchase Guarantee

In case of any problem, bring back the pair shoes within the next 15 days from the date of
purchase and we will replace it with another pair. Condition applies.

 Wide collection

With more than 1000 different designs to choose from, we have one of the widest selection
shoes, handbags and accessories.

 Assured Quality

Strict quality measure are followed during and often the production of all our products. We
have our own factories and warehouse that are supervised by trained and experience
personas.

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  Personalized Attention

In all our stores, our trained professional sales staff is at your service. In case you have any
query about Bata products or services, please feel free to ask for any assistance.

 Product Detail

We ensure that you get complete detail of all our products in the most convenient way. Each
item carries tags that clearly mention type, price, size or other necessary information. It not
only saves your time but also helps you in your selection.

Bata India - Today

 Sells over 45 million pairs of footwear every year

 Serves over 120,000 customers every day

 Sells through over 1200 retail stores

 Operates 5 manufacturing facilities

 Employs more than 6800 people

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20
Products Profile
Bata
PRODUCTS
Global
Bata India Ltd. has a large variety of shoes for all the sections. They also make accessory for men’s
and women’s.

Bata India Ltd. make products of the following categories:

1.) Men`s Wear: They make products of preferably for service men and also have
Subsidiary
Segment of sports shoes for young men under CompanysOf
a different companyBata India . they have a
name POWER
large Variety of products such as:-

 Closed dress
 Closed casual
 Sandals
 Chapels
 Sports wear

Closed dress range starts from 699 to 2699

Closed casual range starts from 399 to 1999

Sandals range starts from 399 to 1899

Chappals range starts from 169-1799

Sports shoes range start from 699-1799

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.
.

2.) Women’s wear: They make products of preferably missy and have large variety of products
such as:-

 Chappals
 Closed
 Sandals

Chappals range starts from 139 to 1249

Closed range starts from 299 to 1299

Sandals range starts from 299 to 1249

3.) Kid`s wear: they make products of the age group 6-17 years

 Infants
 Closed
 Sandals

Infant range from 199

Closed range from 159 to 699

Sandals range from 199 to 599

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1.3 CONCETUAL FRAMEWORK OF THE STUDY
23
Richard L. Prime(2004) states that as a potential theory, the elemental resource-based view
(RBV) is not currently a theoretical structure. Moreover, RBV proponents have assumed stability in
product markets and eschewed determining resources' values. As a perspective for strategic
management, imprecise definitions hinder prescription and static approaches relegate causality to a
“black box.” We outline conceptual challenges for improving this situation, including rigorously
formalizing the RBV, answering the causal “how” questions, incorporating the temporal
component, and integrating the RBV with demand heterogeneity models.

John E. Butler (1991) states that how attitude affects an entrepreneur strategy selection at
organizational level. It also attempts to discover its contingencies exist in these relationships that
may account for difference in firm performance. The model developed based on the existing
literature is tested using the sample of 60 wineries, still operated by their binding entrepreneurs. The
results indicate that an entrepreneur used different approaches to impart their values and beliefs to
their firms. While we show that this affects the eventual strategy choice, data indicates that firms
can eventually be profitable with multiple set of attitudes and strategy combinations.

Saikatbanerjee (2008) Globe has become a small village from the point of view of
communication and market access, but till today country-specific culture plays a deciding role
behind the success of any marketer. To ignore country-specific culture and to move on the
assumption of presence of global culture may well offer a bumpy road to a brand marketer. A close
match between country-culture and brand-culture adds significantly to effectiveness of strategy
execution. Marketers face a tough time to

integrate brand-culture in different countries of operation. This paper has offered a conceptual
framework to manage the integration of brand-culture with the culture of the country of operation.
A matrix framework is proposed for position identification and possible branding strategies, which
is applicable regardless of the type of product or service provided and country of operation.
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C. Chet Miller (1994) Building on previous contingency frameworks, we developed an
encompassing contingency model that might explain the inconsistent planning-performance
findings reported in previous research. The model was empirically tested using meta-analytic data
drawn from 26 previously published studies. Results suggest that strategic planning positively
influences firm performance and those methods factors are primarily responsible for the
inconsistencies reported in the literature. The substantive contingency factors that we examined,
some of which have been frequently cited as important by previous researchers, did not have a large
impact.

Michael W. Lawless Technology and Strategy presents models that help put technology and its
market impacts into perspective. It addresses the broad questions of how technology and markets
evolve, how technology can re-order the "rules" of competition, and how it can shift the balance of
individual firms' competitive advantage. It also blends topics currently capturing attention in
business circles--such as Total Quality Management and the resource-based view of the firm--into a
clear view of technology.
Technology and Strategy also describes methods to develop specific strategies to cope with
challenges facing executives--like evaluating promising, but untried, new technologies. Using
actual case studies from the electronics and bio-tech industries, Goodman and Lawless demonstrate
the use of new techniques to formulate strategy, including Technology Mapping and the Innovation
Audit. Both were created to help executives choose the approach to technology best suited to their
firms ‘.

Offering clear, practical guidance through a complex, fast-changing world of competition, this new
analysis of technology and strategy is a valuable guide for general managers, R&D and
manufacturing managers, strategic planners, and academics.

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P. Christopher Early (1987) Only a few studies that have examined the effects of
participation on an individual's goal acceptance and performance have been conducted within a
cross-cultural context. In the present study, we tested for the contingency between the effectiveness
of goal-setting strategies and cultural values. We examined three goal-setting strategies within three
different cultural groups—assigned goals, goals participative set by a group representative and the
experimenter, and goals participative set by a group. The three cultural groups studied were U.S.
students (n60), individualistic and having a high power distance; Israeli students from urban areas
( = n60), collectivistic and having a low power distance; and Israeli students from kibbutzim ( = 
n  60), highly collectivistic and having a low power distance. Results = indicated that participative
strategies led to higher levels of goal acceptance and performance than the assigned strategy.
Culture did not moderate the effect of goal-setting strategies on goal acceptance, but it appeared to
moderate the strategy on performance for extremely difficult goals.

Robert Jacobson (1987) Determine the strategic role of product quality. American firms losing
markets to Japanese Prior research focused on Study by Phillips, Chang &and European brands
other strategic variables like Buzzel (1983) on the impact thanks to their market share, price or of
quality on ROI, market(perceived) higher advertising. Share, price and
cost.qualityproducts.Seminar „Essential Models and Theories in Marketing” Fall Term 2010

S. PrakashSethi (1977) A conceptual framework is developed to analyze and evaluate business

response patterns under different temporal and sociocultural conditions. Corporate responses are
classified along three dimensions: corporate behavior or social obligation, social responsibility, and
social responsiveness. The contextual component (external environment) is analyzed by dividing
the elapsed time between the emergence of a problem and its ultimate solution into four categories:
the preproblem stage, the problem identification stage, the remedy and relief stage, and the

26
prevention stage. Examples of current application of the framework and directions for future
research are indicated.

27
 JOB PROFILE

2.1 Job title

Job that I performed as intern in Bata limited was of “strategy analysis”

Where I have to perform job to increase the growth and sales of Bata. Strategies were to be made to
achieve organizational goal

The strategies that the company has adopted from past few years and what all are the future
prospects and the strategies that the company can follow

The strategies that the company is following from past few years to increase their sales, increase
their profit margin and shareholder’s wealth. Here we learnt how the company is getting their funds
and how they can increase their investors to invest more in the company.

Job duties and responsibilities

Duties and responsibilities that were to be performed by us as an intern were as follows:

 To expand their business

 To increase shareholder’s wealth
 To beat their competitors
 To increase the profit margin
 To increase their sales
 To enhance their product variety
 To improve their product quality
 To improve their financial position
 To improve their market share
 To improve the goodwill of the company

Here we will study the financial position of the company for past few years and make analysis and
future studies by taking out the ratios of the financial account of the company. We will also analyze
the marketing strategies through graphs and make future strategies to improve marketing strategies
of the company.

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29
RESEARCH METHODOLOGY

Meaning:

Methodology is the systematic, theoretical analysis of the methods applied to a field of study. It
comprises the theoretical analysis of the body of methods and principles associated with a branch of
knowledge. Typically, it encompasses concepts such as paradigm, theoretical model, phases and
quantitative or qualitative techniques.

A methodology does not set out to provide solutions - it is, therefore, not the same thing as a
method. Instead, it offers the theoretical underpinning for understanding which method, set of
methods or so called “best practices” can be applied to specific case, for example, to calculate a
specific result.

It has been defined also as follows:

1. "the analysis of the principles of methods, rules, and postulates employed by a discipline"

2. "the systematic study of methods that are, can be, or have been applied within a discipline"

3. "the study or description of methods"

Research design:

A research design is a systematic plan to study a scientific problem. The design of a study
defines the study type (descriptive, correlation, semi-experimental, experimental, review, meta-
analytic) and sub-type (e.g., descriptive-
longitudinal casestudy), researchquestion, hypotheses, independent and dependent
variables, experimental design, and, if applicable, data collection methods and a statistical
analysis plan. Research design is the framework that has been created to seek answers to
research questions.

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 Types of research design:

 Descriptive (e.g., case-study, naturalistic observation, Survey)

 Correlation (e.g., case-control study, observational study)

 Semi-experimental (e.g., field experiment, quasi-experiment)

 Experimental (Experiment with random assignment)

 Review (Literature review, Systematic review)

 Meta-analytic (Meta-analysis)

3.3.1 Descriptive research design:

Descriptive research is used to describe characteristics of a population or phenomenon being

studied. It does not answer questions about how/when/why the characteristics occurred. Rather it
addresses the "what" question (What are the characteristics of the population or situation being
studied?) The characteristics used to describe the situation or populations are usually some kind of
categorical scheme also known as descriptive categories. For example, the periodic
table categorizes the elements. Scientists use knowledge about the nature of electrons, protons and
neutrons to devise this categorical scheme. We now take for granted the periodic table, yet it took
descriptive research to devise it. Descriptive research generally precedes explanatory research. For
example, over time the periodic table’s description of the elements allowed scientists to explain
chemical reaction and make sound prediction when elements were combined.
31
Hence, research cannot describe what caused a situation. Thus, Descriptive research cannot be used
to as the basis of a causal relationship, where one variable affects another. In other words,
descriptive research can be said to have a low requirement for internal validity.

The description is used for frequencies, averages and other statistical calculations. Often the best
approach, prior to writing descriptive research, is to conduct a survey investigation. Qualitative
research often has the aim of description and researchers may follow-up with examinations of why
the observations exist and what the implications of the findings are.

3.3.2 Method of data collection:

 Secondary data

Secondary data, is data collected by someone other than the user. Common sources of secondary
data for social science include censuses, organizational records and data collected through
qualitative methodologies or qualitative research. Primary data, by contrast, are collected by the
investigator conducting the research.

Secondary data analysis saves time that would otherwise be spent collecting data and, particularly
in the case of quantitative data, provides larger and higher-quality databases that would be
unfeasible for any individual researcher to collect on their own. In addition, analysts of social and
economic change consider secondary data essential, since it is impossible to conduct a new survey
that can adequately capture past change and/or developments

Sources of secondary data:

As is the case in primary research, secondary data can be obtained from two different research
strands:

 Quantitative: Census, housing, social security as well as electoral statistics and other related
databases.

32
  Qualitative: Semi-structured and structured interviews, focus groups transcripts, field
notes, observation records and other personal, research-related documents.

A clear benefit of using secondary data is that much of the background work needed has already
been carried out, for example: literature reviews, case studies might have been carried out,
published texts and statistics could have been already used elsewhere, media promotion and
personal contacts have also been utilized.

This wealth of background work means that secondary data generally have a pre-established degree
of validity and reliability which need not be re-examined by the researcher who is re-using such
data.

Furthermore, secondary data can also be helpful in the research design of subsequent primary
research and can provide a baseline with which the collected primary data results can be compared
to. Therefore, it is always wise to begin any research activity with a review of the secondary data.

3.3.2.1 Instrument of data collection:

 RATIOS

 GRAPHS

 OBSERVATION

 PERFORMANCE EVALUATION

3.3.3 Limitations

 Sample size -- the number of the units of analysis you use in your study is dictated by the
type of research problem you are investigating. Note that, if your sample size is too small, it will
be difficult to find significant relationships from the data, as statistical tests normally require a

33
 larger sample size to ensure a representative distribution of the population and to be considered
representative of groups of people to whom results will be generalized or transferred.

 Lack of available and/or reliable data -- a lack of data or of reliable data will likely
require you to limit the scope of your analysis, the size of your sample, or it can be a significant
obstacle in finding a trend and a meaningful relationship. You need to not only describe these
limitations but to offer reasons why you believe data is missing or is unreliable. However, don’t
just throw up your hands in frustration; use this as an opportunity to describe the need for future
research.

 Lack of prior research studies on the topic -- citing prior research studies forms the basis
of your literature review and helps lay a foundation for understanding the research problem you
are investigating. Depending on the currency or scope of your research topic, there may be little,
if any, prior research on your topic.

 Measure used to collect the data -- sometimes it is the case that, after completing your
interpretation of the findings, you discover that the way in which you gathered data inhibited
your ability to conduct a thorough analysis of the results. For example, you regret not including a
specific question in a survey that, in retrospect, could have helped address a particular issue that
emerged later in the study. Acknowledge the deficiency by stating a need in future research to
revise the specific method for gathering data.

 Self-reported data -- whether you are relying on pre-existing self-reported data or you are
conducting a qualitative research study and gathering the data yourself, self-reported data is
limited by the fact that it rarely can be independently verified. In other words, you have to take
what people say, whether in interviews, focus groups, or on questionnaires, at face value.
However, self-reported data contain several potential sources of bias that should be noted as
limitations: (1) selective memory (remembering or not remembering experiences or events that

34
 occurred at some point in the past); (2) telescoping [recalling events that occurred at one time as
if they occurred at another time]; (3) attribution [the act of attributing positive events and
outcomes to one's own agency but attributing negative events and outcomes to external forces];
and, (4) exaggeration [the act of representing outcomes or embellishing events as more
significant than is actually suggested from other data]

Analysis and Interpretation

value creation

dec'09 dec'10 dec'11 dec'12 dec'13

return on capital employed 21.32 25.91 31.23 28.20 27.14

% % % % %

growth parameter

net sales (cr) 1092 1258 1543 1842 2065

35
Y-o-Y Gr.Rt. 10.60 15.30 22.60 19.40 12.10
% % % % %

adjusted EPS 10.47 14.72 22.91 26.66 31.11

book value per share 46.15 56.57 84.76 104.12 126.53

adjusted net profit 67.3 94.6 147 171 200

net op. cash flow (cr) 110 82.9 69.8 185 182

CAGR (compounded annual growth rate)

9yr 5yr 3yr 1yr

net sales 12.90 15.90 18% 12.10

% % %

adjusted EPS NA 26.40 28.30 16.70

% % %

book value per share 28.5 27 30.8 21.1

Key financial parameter

dec'0 dec'1 dec'11 dec'1 dec'1

9 0 2 3

return on equity(%) 21.52 25.82 30.28 26.89 25.94

operating profit 11.87 13.35 15.51 15.56 16.35

margin(%)
36
net profit margin(%) 6.17 7.53 9.55 9.3 9.68

debt to equity 0.08 0.04 0 0 0

working capital days 128 123 118 114 123

cash conversion cycle 34 21 25 35 39

entity percentage
holding

promoter 52.96%

institution 30.45%

non-institution 16.59%

5 year analysis:

The financial performance of the company was below satisfactory in the early part of the decade i.e.
from FY 03 - FY 05; thereafter the company restructured its business and improved its financial
performance over the last six years. The consolidated 10 Year X-Ray of Bata India Ltd. has been
considered for analysis owing to the significant contribution of its subsidiaries.
Since 2007, Bata India Ltd. has reported improved performance. The Value Creation Index has been
above our benchmark of 0.25. ROCE and ROE figures have been very good with 6 year average
figures of 26% and 27%, respectively.
The recent years’ considerable improvements in manufacturing, supply chain management; retail
expansion program have boosted the margins. Moreover in last 2 years, selling & distribution
37
expenses and employee cost as a percentage of sales have declined causing expenditure in sales
term to drop on Y-O-Y basis. In addition to this, sudden fall in tax expenses has resulted in steep
rise in margins. The improving margins along with increasing turnover ratio have resulted in
increasing returns.
Bata India Ltd. has continued its strategy of large scale expansion of retail stores, renovation of
existing stores & improvement in customer service and introduction of new value oriented products.
This has enabled the company to report 16% CAGR growth in sales during last 6 years. The rise in
EPS has been in proportion to rise in net sales as company recorded higher net profits in last 4
years.
Over the last 7 years, the company has reduced its debtor and inventory days, which helped the
company to post positive cash flow over the period indicating efficient working capital
management. In FY 10 & 11, there has been enormous other income and increase in change in
working capital (esp. increase in inventory), depressing the CFO for respective years vis-a-vis the
net profit figures.
The company has also reduced its debt over the last 6 years, which helped the company to maintain
the Debt to Net Profit ratio below our benchmark of 3. Moreover, in the last 2 years it has been able
to be debt free company.
Considering improved performance in the latter half of the last decade, we can say that the 5
Year X-Ray of Bata India Ltd. is Green (Very Good).

FINANCIAL HIGHLIGHTS 2004-2013

(Rs. In millions) 2004 2005 2006 2007 2008

PROFITS AND APPROPRIATIONS
sales and other incomes 7289.9 7525.3 8219.7 9038.0 10235.3
3 9 9 5 2
profit before depreciation and tax -510.52 255.93 628 711.61 908.41
Depreciation -124.16 -120.02 -136.17 -160.11 -190.01
profit before tax -634.67 135.91 491.82 551.5 718.4
Taxation 7.19 -11 -90.31 -40.62 -111.03
profit after tax -627.48 124.91 401.51 510.88 607.37
prior period items 0 0 0 -36.44 0
38
net profit -627.48 124.91 401.51 474.44 607.37
dividend and dividend dist. Tax 0 0 0 -150.37 -187.96
retained earnings 0 0 401.51 324.07 419.4
ASSETS EMPLOYED
Fixed assets-Gross 3594.9 3639.1 3076.8 3251.9 3506.48
7 1
fixed assets-net 1396.5 1319.2 802.47 1042.3 1178.8
5 4 3
Investments 48.52 49.77 172.43 172.48 172.48
net current assets 1379 2061.9 1750.3 1805.0 1930.06
9 9 5
other current assets 0 0 0 0 0
(includes DTA, long term loans and
advances
2824.0 3431 2725.3 3019.8 3281.34
6 7
FINANCED BY
equity shares 514.22 642.64 642.64 642.64 642.64
Reserves 1066.3 1972.0 1477.3 1859.2 2192.4
6 7 5 2
shareholder funds 1580.5 2614.7 2119.98 2501.8 2835.04
9 1 6
loan funds 1243.4 816.29 605.32 518.01 446.3
8
non-current liabilities 0 0 0 0 0
2824.0 3431 2725.3 3019.8 3281.34
6 7

2009 2010 2011 2012 2013

11210.11 12923.42 16959.91 19017.06 21297.54
1281.87 1755.08 3605.04 3033.39 3418.21
-279.23 -325.1 -411.01 -513.75 -591.97
1002.63 1429.97 3194.03 2519.64 2826.24
-330.36 -476.45 -935.64 -803.61 -918.81
672.27 953.52 2258.39 1716.03 1907.43
0 0 0 0 0
672.27 953.52 2258.39 1716.03 1907.43
39
-225.56 -299 -447.14 -448.13 -491.68
446.72 654.52 1811.25 1267.9 1415.75
3754.87 4178.77 5084.4 5793.97 6252.34
1309.17 1534.39 2270.66 2594.66 2699.52
172.48 172.48 48.51 48.51 48.51
2096.4 2413.23 3423.89 3482.26 4590.48
0 0 0 1438.97 1864.35
3578.06 4120.11 5743.05 7564.4 9202.76
642.64 642.64 642.64 642.64 642.64
2684.93 3339.73 5100.42 6360.66 7767.37
3327.57 3982.37 5743.05 7003.3 8410.01
250.49 137.74 0 0 0
0 0 0 561.1 792.75
3578.06 4120.11 5743.05 7564.4 9202.76

SIGNIFICANT RATIOS 2004-2013

2004 2005 2006

MEASURE OF
INVESTMENTS
Return on equity profit after tax/shareholder fund (%) -25.41 4.01 18.94
earnings per share net profit/no. of shares (RS) -12.2 2.07 6.25
dividend cover (TIME 0 0 0
S)
dividend (%) 0 0 0
book value of an equity shareholder funds/ no. of shares (RS) 48.02 48.51 32.99
share
MEASURE OF

40
PERFORMANCE
Profitability a) profit before tax/sales (%) 8.76 1.85 6.19
b) profit after tax/sales (%) 8.66 1.7 5.05
capital turnover sales/total funds (times) 1.95 1.87 2.92
stock turnover sales/stocks (times) 2.76 2.63 2.88
working capital turnover sales/net current assets (times) 3.2 2.87 4.54
MEASURE OF FINANCIAL STATUS
Debt-equity ratio debt/equity (times) 0.5:1 0.26:1 0.29:1
current ratio current assets/current liabilities (times) 1.91:1 1.94:1 1.93:1
F.A to Shareholder funds net F.A/shareholder fund (times) 0.56:1 0.42:1 0.38:1

2007 2008 2009 2010 2011 2012 2013

20.42* 21.42 20.2 23.94 24.74** 24.5 22.68

7.38 9.45 10.46 14.84 22.11** 26.7 29.68

3.69 3.78 3.49 3.71 3.68** 4.45 4.57

20 25 30 40 60 60 65

38.93 44.12 51.78 61.97 89.37 108.98 130.87

6.19* 7.1 9.01 11.2 13.42** 13.46 13.47

5.74* 6 6.04 7.47 9.08** 9.17 9.09

2.95 3.09 3.11 3.1 2.73 2.67 2.5

2.93 3.46 4.01 4.27 4 4.05 3.6

4.93 5.25 5.31 5.29 4.57 5.38 4.57

0.21:1 0.16:1 0.08:1 0.03:1 0 0 0

1.77:1 1.71:1 1.72:1 1.53:1 2.00:1 1.93:1 1.99:1

0.42:1 0.42:1 0.39:1 0.39:1 0.4:1 0.37:1 0.32:1

* Without considering Prior Period Items

* Without considering Gains from Surplus Property Development
* All ratios are calculated as per revised Schedule VI to the Companies Act, 1956

41
FINANCIAL REVIEW

2013 2012
(in Rs. millions) (in Rs. millions)

Gross Turnover 20,984.06 18,717.54

Less: Excise Duty on Turnover 332.32 293.01

Net Turnover 20,651.74 18,424.53

Other Income 313.48 299.52
Total 20,965.22 18,724.05

Profit/(Loss) before Depreciation and Taxation 3,418.21 3,033.39

Less: Depreciation 591.97 513.75

Profit / (Loss) before Taxation 2,826.24 2,519.64

Provision for Taxation:

– Current Tax 1,156.01 908.43
– Deferred Tax Charge/ (Credit) (Net) (237.20) (101.44)
– Income Tax for earlier year — (3.38)

Net Profit 1,907.43 1,716.03

Profit available for Appropriation 6,576.46 5,288.76

42
MARKETING ANALYSIS

Bata India Company Marketing Analysis and Breakdown:

Bata India is the leading and largest manufacturers of footwear in India, which is a part of Bata
Shoe Organization (BSO). Initially footwear was produced in handicrafts and small segments
before the entry of Bata in Indian market. Bata Shoe Company Private Limited was incorporated
as a small operation unit in 1931 in Konnagar, India. It built its first manufacturing unit in the
start of 1934. The company expanded in the years followed in its size and the township was
known as Batanagar. It was the first company to receive ISO: 9001 certification for its
manufacturing unit in the Indian shoe industry. The company went public in 1973 and changed
its name to Bata India Limited. It has its manufacturing units and tannery in five specialized
location across the country. The company has more than 1200 stores in its retail network in the
metros, mini-metros and towns. The retail concept includes four types of stores across the
country. They are City store, large store format, and Family store and Factory store. These four
types were introduced by company in-order to reach all segments of customers from Tier1 to
Tier3 locations. It also operates in non retail distribution with 12 depots across the country,
which sells its products through more than 160 distributors and 20,000 independent shoe dealers.
The company collaborates with corporate customers to design various shoe lines under both
international and national brands such as Hush Puppies, Marie Claire, Mocassino, Ambassador,
Comfit, School, Quovadis, North Star, Scholl’s, Weinbrenner, Bubble Gummers, Baby Bubble,
Power and Sparks. The collaboration is done in order stay in-line with latest technology and
industry specification to meet the customer requirements. It also focuses on army, police forces
and mining industries with canvas shoes, hunter shoes and miner’s shoes. It currently employs
more than 6800 people. The company sells more than 45 million pairs of shoes every year and
also serves 120,000 customers every day.

Macro Analysis
It is very important for an organization to consider its environment before initiating a marketing
process. This must be a continuous process and should help in the positioning the organization in
the market. The factors that are considered are Political, Economical, Social and Technology.

43
POLITICAL FACTORS
 Rules and regulations for tannery wastes.
 Government stability.
 Fewer sports events apart from cricket to attract the customers.
 Merging of Adidas and Reebok
 Market pressure on sales.

ECONOMICAL FACTORS
 Seasonal Issues: Sports is more encouraged in summer.
 Increasing buyer power makes the customers to look at branded shoes.
 Lack in targeting the women and kid segments.
 Huge consumer market.

SOCIAL FACTORS
 Change in the lifestyle of the people (buyer).
 Increasing fashion trends.
 Advertising, publicity and media.
 Change in buyer behavior.

TECHNOLGICAL FACTOR
 Increase in competing technology development.
 Up-ward shift in innovation and manufacturing maturity.

44
Micro Analysis:
Customers – The products of Bata targets a wide range of customers which also includes Army,
Police Force and Mining industries in all locations. This is mainly due to the wide range of
products made available in market by the company. The company has two types of customers
they are the final users and the It offers good quality products with best price in market, which
means that the price-quality ratio is excellent for the Bata products.
Competitors – The competitors for Bata India in the market are Puma, Nike, Reebok, Adidas,
Woodlands, Liberty and Action. The arrival of local and international brands in the Indian market
has created a highly competitive environment in the footwear industry market. The products
from the competitors serve as substitutes to the customers.
Suppliers – The raw materials for the company is PVC soles and the animal skin, the people or
organization which supplies these raw material are known as the suppliers. Bata’s suppliers are
Chinese raw material holders and the local cottage industries that supplies raw materials to the
company.

SWOT ANALYSIS

Strength
 Availability of raw materials and other inputs for the company’s operations.
 Manufacturing units in various places helps in distribution.
 Subsidiaries and Tax incentives on machineries.
 Established links with buyers from Europe and US.
 Friendly government policies for export.
 The brand name is immediately identified with footwear by the consumers.

Weakness

45
  Facing challenges to move to new production technology, because of its existence for
more than seven decades.
 High labour costs, as the company has large number of employees.

Opportunities
 There is a good scope for diversification into other products like leather wallets, seat
covers and other types of leather garments.
 Growing National and International market.
 Developing fashion consciousness globally.
 Being in a large developing market which offers a demand for footwear, the company
finds its potential in leveraging the Bata brand for marketing other merchandise consumer
products.

Threats
 Changing fashion trends is hard to adopt for the Indian Leather Industries.
 Entry of global competitors into National market brings heavy competition in the market.

Financial & Marketing Aims and Objectives

Bata India has around 13.7 percent of the market share and the company has decided to increase
its market share by introducing a new product under the brand Power in the market. Power brand
is exclusively meant for sportswear. The company expects to have an increase of 3.25 percent in
its market share by introducing this product. The product to be launched is named as Power -
Lite. It sells around 45 million pairs every year and has decided to increase its sales by
introducing Power- Lite. The decision to introduce a new product was made in-order to compete
with the global brands like Nike, Adidas, Reebok, Puma etc in the Indian market. These global
brands were the suppliers of specialized sports shoes and thus Bata is trying to capture its
position in the market for the specialized sports shoes. The company identified some issues and
customer needs with respect to their product. Their product was lagging behind in latest design
(style) and the customer’s comfort when wearing the shoe. The company has invested in huge

46
amount in changing its store appearance and has also taken steps to incorporate the new
technology involved in manufacturing specialized shoes. The company forecasted the sales of
specialized sports shoes for the upcoming years and will have an increase by 14 percent in its
revenue, after the launch of the new product. The new specialized sports shoes targets the people
involved in sports and all segments of customers from children to adults. Thus the marketing,
financial aims and objectives are discussed.

Market Segmentation & Target Segment/s

The process of grouping the market is known as Segmentation. The market segmentation is done
based on the demographic and psychographic factors for Bata. The demographic factors are age,
sex and occupation. Personal Activities like hobby, social events (marathon), sports, shopping
and Personal interests like fashion, styles were considered in psychographic factors and buyer
behaviour which includes the changing trend in buying pattern for the segmentation of market
[ref-module book]. The foot wear industry market falls under the ideal type market, as it covers
all segments of customers. The customers share their needs in this market. The target segments
are classified into three categories namely Display Buyers, Knowledge Buyers and
Fashion/Stylish Buyers. The customers who come under these buyer categories are children,
students, adults, elderly people and sports people.

Positioning
Positioning is done in-order to locate the brand in the minds of the customers, which in-turn
increases the benefits of the company. Positioning results in customer-focused value proposition.
The positioning is done with respect to the brand and product portfolio. Positioning strategy is
done by identifying the possible competitive advantages through which a company can attain
sustainable position in the market. Bata always aims to be sustainable in the market and it has
proved it over years. The company has taken various steps to increase its market share, some of
them are renovating its already existing stores, opening new stores in sub-urban places and the
main strategy which is followed by the company is high quality and low price. This has made the

47
company sustainable for more than seven decades in India. The company will follow the same
strategy for the new product Power-Lite. On the other hand when looking into the market for the
products from Nike, Puma, Adidas and Reebok, they charge a huge amount for their sports
products. The cost of shoes from Bata is relatively low, when compared to others.

Positioning Map of Bata’s Product in Footwear Industry Designed by Author.

There are few local manufacturers who produce the replica of the branded products with low
quality and low costs. This makes the customers feel unsatisfied. Bata is already filling the
positional gap in the market following low price and high quality strategy. This new product also
comes under the same category, which adds value to the impression given to the customers in
relation with the competing product. The low price and high quality strategy works well in the
Indian market as it is a developing market.

Product
A product/service is anything that a firm or an individual cells, which satisfies the customer
needs. The new product will replace an existing product named Life-Line under the same brand
Power.

Core, Formal and Augmented Products.

The core product is the Power Lite; the formal products are its comfort, style, brand name and
features. The augmented product is something which is offered after sales, in this case free
repairing service is offered by the company for about 6 months from the time of sale. The
product should have the following features wearing comfort, styling and latest design to compete
with the competitor’s product.

Developing a new product involves the following processes.

48
Innovation of new ideas: A research done by the company among its employees, customers,
competitors and other sources using feedback, surveys and other questionnaire in-order to
generate a new idea.
Screening the ideas: In this stage all the feasible idea are selected from the bunch of idea that is
generated with the help of the footwear industry checklist.
Testing the concept: The new product is tested conceptually with the help of selected customers
(eg – athletes) for any changes or improvements, before it reaches the market.
Planning a strategy: Marketing and Financial objectives for the new product is set, which helps
the company to face the success and further development or failure of the product.
Market Test: The new product is made available in the selected places and tested with selected
customers and their feedback is got on the product.
Life Cycle of the Product
The product life cycle of a shoe is short, when compared to many other products. The shoe
seemed to have a short introduction period, a little bigger growth period where it reaches its
maturity stage. It stays in the maturity stage for longer time and then decline stage starts when a
new product or a replacing product is launched in the market.

Product Life Cycle of Shoe

Pricing
The company operates with low price market penetration strategy. The main advantages of this
strategy is increased sales growth, builds strong market position and high product awareness in
the market. The price of the Power-Lite is determined to be Rs 2799 (Indian Rupee - INR)
considering variable, fixed costs and the market floor, ceiling price. The company gets its
contribution (profit) after selling 20,000 units of Power-Lite.

Pricing Model help in determining the price of Power-Lite

The pricing level of Nike, Adidas, Puma and Reebok are higher than Bata, they must follow this
during the launch of the product in-order to sell their product initially. The break even analysis

49
determines the point at which the contribution is made with respect to he number of products
sold.

Break Even Analysis of product Power-Lite

Place
The company will launch its new product in all the Tier 1 and Tier 2 locations of the market. This
is done because of the demographic factors, psychographic factors and the target segments (wide
range of customers). These are the changes that the company must do instead of launching the
product in all the locations of the market. The firm a good distribution channel, they sell their
products directly through their factory retail stores, franchise merchants, wholesalers,
distributors, independent dealers and also in online. Hence they cover all the locations of the
market in different ways.

Marketing Channels of Bata.

Promotion
As this is a new product the company must advertise in media such as newspaper, TV, Banners
and internet. They should follow the push and pull promotions in the initial stage which can be
later changed to pull promotions, if the product is success in the market. The push and pull
promotions include discounts to the wholesalers, staff incentives, advertising, display at point of
sale. This should be done in consideration with the estimated budget for promotion purpose.

Physical Evidence
The company has taken steps to change the buying experience of the customers by renovating
and expanding its stores in all the location, initially in Tier 1 location and it has started slowly to
continue in Tier 2 location which makes the customers to have good shopping experience.

Store Layout source from Bata India website.

50
The company has four types of stores that opened in recent years; they are City store, Large store
format, Family store and Factory store. They must also expand and renovate stores in tier 3
locations of the market.

Marketing Strategy Communication

The main objective of the strategy communication is to create the awareness and interest in
customers of the new product, which in-turn benefits the organization to capture the market share
and increase its contribution (profit). This is done by the AIDA model, where attention, interest,
desire and necessary action is done for the demand in the market.

AIDA Model for BATA.

Awareness of the new product: Generating awareness is done through advertising in media like
TV, newspaper, magazines, banners and internet. When this is done, the customers will be aware
of the new product in the market.
Creating Interest: Done through advertising by emphasizing the formal products such as brand
name, features, comfort and latest design. Thus creating an interest in the customer’s mind for
the new product.
Arousing Desire: This can be done through sales promotions, word of mouth from the customers,
who have already used the product.
Actions: When all the above strategic plans are done, the product must be made available in the
market. If in case the product is not available, the customer gets disappointed and they find a
substitute for their needs, which decrease the reputation of the brand and the company’s profit.

Sales Strategy
This explains how the new product (Power-Lite) is sold in the market. The plan involves two
types of promotions Push and Pull. During the introduction stage the product can be pushed into
the market by promotional offers such as discounts to the wholesalers, distributors when ordered

51
in bulk numbers. Another type of pushing is done by giving incentives to the employees who the
sell the new product in more numbers when compared to other employees. Pulling promotion
influences the customers to buy it. The wholesalers, distributors and customers can be pulled by
giving credit when ordered in bulk, displaying at the point of sale (stores), and complements
when purchased the Power-Lite.

Profit and Loss Forecast

The below given is the profit and loss account of Bata India, this an assumption made by the
author considering that the product is success in the market. The P&L forecast very clearly
shows that the company will have profit (contribution) from the Power-Lite product which is
launched.

Timing
The product will be launched during the Indian Premier League, this is done because of the
because of the influence of cricket among the people. The product’s result will be known in six
weeks of time from the date of launch.

Contingency
Few sports shoes of Bata are already available in the market; however most of the customers
were unsatisfied with the medium quality and comfortless products. Hence Bata has decided to
launch the Power-Lite, with low price and good quality feature which is well suited for the
developing Indian market. This would replace many global brands’ product with its high quality,
new style, comforts, latest design and technology used in the sole of the shoe. The product
Power-Lite would be big success, if no competitors are providing such a good quality product at
low price.

FUTURE PROSPECTS:

52
The Indian Leather Industry occupies a place of great prominence in the Indian economy in view
of its substantial export earnings, employment generation and growth potential. The leather
industry is an employment intensive sector, providing jobs to about 2.5 million people, mostly
from the weaker sections of our society.
The Indian footwear industry is the world’s second largest footwear producing country, second to
china and the third largest market. In the last five years, the leather footwear and footwear
component production increased by 60%. Today, about 220 Cr. pairs of shoes are made in the
organized and unorganized sector. The Indian footwear market, as of FY 2012, is estimated to be
Rs. 20-22,000 Cr., growing at 12% per year. Of this, 40% is organized; with rural India
accounting for 75% of the consumption. The retail footwear segment in India is extremely price
sensitive and has been steadily growing over the years. Major part of the demand is met by the
unorganized sector. The branded shoes market only accounts for 20 per cent of the entire market.
While International Brands mainly dominate the higher end of the consumers, the lower and
middle end is dominated by home grown players like Bata India as well as unorganized players.
The focus of the company would be to shift the consumers who buy footwear from the
unorganized sector to buy from the company's branded footwear range at price points which will
be affordable and competitive with the unorganized sector.

Key concern:

Competition from global players in domestic market:

As the company is continuously increasing its presence in the premium footwear segment, thus,
it is expected to face tough competition from Global players like Nike, Adidas in premium
footwear market segment in domestic market. It might affect the profitability of the company as
the company has to increase its expenditure on ads to increase the sales of premium products.
Considering above points, we can say that the long term future prospects of the company
are Green (Very Good).

53
 Key learning’s and Recommendations

5.1 Findings/Learning’s:

 The financial performance of the company was below satisfactory in the early part of the
decade i.e. from FY 03 - FY 05; thereafter the company restructured its business and
improved its financial performance over the last six years.
 The consolidated 10 Year X-Ray of Bata India Ltd. has been considered for analysis
owing to the significant contribution of its subsidiaries.
 Since 2007, Bata India Ltd. has reported improved performance. The Value Creation
Index has been above our benchmark of 0.25. ROCE and ROE figures have been very
good with 6 year average figures of 26% and 27%, respectively.
 The considerable improvements in manufacturing, supply chain management; retail
expansion program have boosted the margins. Moreover in last 2 years, selling &

54
 distribution expenses and employee cost as a percentage of sales have declined causing
expenditure in sales term to drop on Y-O-Y basis.
 In addition to this, sudden fall in tax expenses has resulted in steep rise in margins. The
improving margins along with increasing turnover ratio have resulted in increasing
returns.
 Bata India Ltd. has continued its strategy of large scale expansion of retail stores,
renovation of existing stores & improvement in customer service and introduction of new
value oriented products. This has enabled the company to report 16% CAGR growth in
sales during last 6 years.
 The rise in EPS has been in proportion to rise in net sales as company recorded higher net
profits in last 4 years.
 The company has also reduced its debt over the last 6 years, which helped the company
to maintain the Debt to Net Profit ratio below our benchmark of 3. Moreover, in the last 2
years it has been able to be debt free company.
 The company is continuously increasing its presence in the premium footwear segment

5.2 Suggestions:
 Company should continues to open approx. 100 new retail stores every year across India
and shut down or relocate unviable stores.
 Company should increase rate of dividend for dividend holder to attract more investors to
invest in company.
 Company should start accepting fixed deposits from investors to increase their funds.
 Company should open more retail stores in the market to capture more market share than
its competitors.
 Company should provide more variety of products to customers to attract new and retain
old.
 Company should perform regular CSR to improve the goodwill and build trust amongst
people.
 Company should take into consideration their micro and macro factors while continuing
and making future strategies for expansion.
 Company should adopt price sensitive techniques against competitors.

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  Company can provide large employment opportunities to weaker section people.

 The focus of the company should be to shift the consumers who buy footwear from the
unorganized sector to buy from the company's branded footwear range at price points
which will be affordable and competitive with the unorganized sector.
 Company should adopt aggressive expansion plan which is considered to be key factor
for revenue growth
 Company can adopt online business expansion plan.
 Company should provide operational efficiency amongst peer group.
 Company should open Foot in stores with a new range of footwear focusing on affordable
fashion and trendy styles to attract young crowd.

Conclusion

The financial performance of the company was below satisfactory in the early part of the decade i.e.
from FY 03 - FY 05; thereafter the company restructured its business and improved its financial
performance over the last six years. The consolidated 10 Year X-Ray of Bata India Ltd. has been
considered for analysis owing to the significant contribution of its subsidiaries

.Since 2007, Bata India Ltd. has reported improved performance. The Value Creation Index has
been above our benchmark of 0.25. ROCE and ROE figures have been very good with 6 year
average figures of 26% and 27%, respectively. The considerable improvements in
manufacturing, supply chain management; retail expansion program have boosted the margins.
Moreover in last 2 years, selling & distribution expenses and employee cost as a percentage of
sales have declined causing expenditure in sales term to drop on Y-O-Y basis. In addition to this,
sudden fall in tax expenses has resulted in steep rise in margins. The improving margins along
with increasing turnover ratio have resulted in increasing returns.

56
Bata India Ltd. has continued its strategy of large scale expansion of retail stores, renovation of
existing stores & improvement in customer service and introduction of new value oriented
products. This has enabled the company to report 16% CAGR growth in sales during last 6 years.
The rise in EPS has been in proportion to rise in net sales as company recorded higher net profits
in last 4 years. The company has also reduced its debt over the last 6 years, which helped the
company to maintain the Debt to Net Profit ratio below our benchmark of 3. Moreover, in the
last 2 years it has been able to be debt free company.
Therefore Company should continues to open new retail stores every year across India and shut
down or relocate unviable stores. They should increase rate of dividend for dividend holder to
attract more investors to invest in company. Company should start accepting fixed deposits from
investors to increase their funds. Company should perform regular CSR to improve the goodwill
and build trust amongst people. Company should take into consideration their micro and macro
factors while continuing and making future strategies for expansion. Company should adopt
price sensitive techniques against competitors. Company can provide large employment
opportunities to weaker section people. The focus of the company should be to shift the
consumers who buy footwear from the unorganized sector to buy from the company's branded
footwear range at price points which will be affordable and competitive with the unorganized
sector.

REFERENCES

 https://www.scribd.com/doc/19538378/Strategic-Analysis-of-Case-study-Bata-Strategic-
Choices

 (http://www.indianshoebazaar.com/ind_india.asp)

 http://leather.indiabizclub.com/info/indian_leather_industry_overview

57
 http://footwearsinfoline.tripod.com/export_import.htm)
 http://www.thaindian.com/newsportal/politics/big-boost-for-agras-shoe-industry-if-state-
government-helps_100116975.html#ixzz0XAkn7VPx)
 (jammu.gov.in/departments/.../Central-Policy%20and%20Procedures.pdf)
 www.tradeindia.com/seller...38/shoes-materials-accessories. html)
 (www.dow.com/products-services/division/textiles.html)

 (http://www.sharekhan.com/MarketCorner/DetailedReport.aspx?Type=COMP-
HIS&SSKICode=BATA)

 (http://www.sebi.gov.in/dp/bata.pdf)

 (http://www.bataindia.com/page.php?kon=5_2_1)

 (http://www.bataindia.com/page.php?kon=4_0)

 (http://www.bata.in/catlist.php?catItem=11)

 http://indmin.nic.in

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