BASICS OF FINANCIAL MANAGEMENT

ASSIGNMENT -2

COMPANY-

NAME ADYA

DIVISON E

ROLL NO 03

PRN 20020441017

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 INTRODUCTION AND HISTORY

BATA India Ltd (BIL) is the largest footwear retailer in India, offering footwear, accessorize
and bags across brands like Bata, Hush Puppies, Naturaliser, Power, Marie Claire,
Weinbrenner, North Star, Scholl, Bata Comfit and Bubblegummers to name a few. Currently,
the company’s ~70% revenue is derived from Men & Kids footwear segment and balance
from women’s segment. Its retails in over 1,290 Bata stores on bata.in and has thousands of
multi-brand footwear dealer stores pan-India

Bata Corporation  is a Swiss-domiciled multinational footwear and fashion

accessory manufacturer and retailer, founded in the town of Zlín, today in the Czech
Republic. After World War II, its factories in socialist states were nationalized, while its
branches in capitalist states remained family-owned. It is now based in Lausanne,
Switzerland. The principal subsidiaries are Bata Europe (based in Zlín), Bata North America
(based in Toronto), Bata Asia-Pacific-Africa (based in Singapore) and Bata Latin America
(based in Mexico).

A family-owned business, the company is organized into three business units: Bata, Bata
Industrials (safety shoes) and AW Lab (sports style). The company is the world's leading
shoemaker by volume, and it has a retail presence of over 5,300 shops in more than 70
countries and production facilities in 18 countries.

The T. & A. Baťa Shoe Company was founded on 24 August 1894 in the Moravian town
of Zlín, Austria-Hungary (today in the Czech Republic), by Tomáš Baťa ), his brother Antonín
and his sister Anna, whose family had been cobblers for generations. The company
employed 10 full-time employees with a fixed work schedule and a regular weekly wage.

In the summer of 1895, Tomáš was facing financial difficulties. To overcome these setbacks,
he decided to sew shoes from canvas instead of leather. This type of shoe became very
popular and helped the company grow to 50 employees. Four years later, Baťa installed its
first steam-driven machines, beginning a period of rapid modernisation. In 1904, Tomáš
read a newspaper article about some machines being made in America. Therefore, he took

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three workers and journeyed to Lynn, a shoemaking city outside Boston, in order to study
and understand the American system of mass production. After six months he returned to
Zlín and he introduced mechanized production techniques that allowed the Baťa Shoe
Company to become one of the first mass producers of shoes in Europe. Its first mass
product, the “Baťovky,” was a leather and textile shoe for working people that was notable
for its simplicity, style, light weight and affordable price. Its success helped fuel the
company’s growth. After Antonín's death in 1908, Tomáš brought two of his younger
brothers, Jan and Bohuš, into the business. Initial export sales and the first ever sales
agencies began in Germany in 1909, followed by the Balkans and the Middle East. Baťa
shoes were considered to be excellent quality, and were available in more styles than had
ever been offered before. By 1912, Baťa was employing 600+ full-time workers, plus another
several hundred who worked out of their homes in neighbouring villages.

IN INDIA- Bata has a strong presence in countries including India where it has been present
since 1931. Bata India has five factories and two tanneries. The Mokameh Ghat tannery
in Bihar (1952) is the second largest in Asia.

At the time of Tomáš's death, the Bata company employed 16,560 people, maintained 1,645
shops and 25 enterprises. Jan Antonín Baťa, following the plans laid down by Tomáš Baťa
before his death, expanded the company more than six times its original size
throughout Czechoslovakia and the world. Plants in Britain, the
Netherlands, Yugoslavia, Brazil, Kenya, Canada and the United States followed in the
decade. In India, Batanagar was settled near Calcutta and accounted from the late 1930s
nearly 7500 Baťamen. The Baťa model fitted anywhere, creating, for example, canteens for
vegetarians in India. In exchange, the demands on workers were as strong as in Europe: "Be
courageous. The best in the world is not good enough for us. Loyalty gives us prosperity &
happiness. Work is a moral necessity!" Bata India was incorporated as Bata Shoe Company
Pvt. Ltd in 1931[5] and went on to become Bata India Ltd. in 1973. The Batanagar factory was
the first Indian shoe manufacturing unit to receive the ISO 9001 certification in 1993.

Main Objects of The Company The main objects of the Company as detailed in its MoA are:
1.To carry on business as boots and shoes manufacturers and dealers, leather merchants
and manufacturers, leather dressers, tanners, dealers in hides and skins and other materials,
manufacturers of and dealers in rubber goods.

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2. To carry on the business of manufacturers and dealers in machinery for the production of
boots and shoes and other leather and rubber goods and to carry on all business connected
therewith.

3. To establish and maintain shoe-repair shops and/ or Orthopaedical departments.

CAPITAL STRUCTURE AND STAKEHOLDER PATTERN

from Year - To Year Class Of Share Issued Capital (Crores)

2019 - 2020 Equity Share 64.28

2018 - 2019 Equity Share 64.28

2017 - 2018 Equity Share 64.28

2016 - 2017 Equity Share 64.28

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 STOCK PRICE ANALYSIS

 Bata India slips on posting Q2 net loss of Rs 44 cr.Bata India fell 1.14% to Rs 1349.25
after the footwear major posted a consolidated net loss of Rs 44.32 crore in Q2
September 2020 as against net profit of Rs 71.30 crore in Q2 September 2019.


Key Ratios and Highlights

Quarterly Annual (TTM)
Growth (%)

Particulars QoQ YoY 1-Year 3-Years 5-Years

Revenue 172.35 -49.05 -36.23 7.29 2.55

Operating Profit 196.35 -83.95 -42.84 39.54 18.24

Net Profit 56.07 -162.15 -96.85 27.44 7.29

EPS 56.07 -162.15 -96.85 27.44 7.29

Book Value -- -- 8.73 12.67 13.75

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 Average Annual (TTM)
Key Ratios (%)

Particulars 3-Year 5-Years TTM Mar-20 Mar-19

Operating Margin 21.49 18.22 22.33 29.83 18.97

Net Margin 9.90 8.98 0.56 10.53 10.97

Return on Equity 18.10 17.28 0.64 18.10 20.46

Return on Capital 29.87 27.47 -- 33.88 30.59

Debt to Equity (x) -- -- 0.00 0.00 0.00

FINANCIAL ANALYSIS

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Parameter MAR 20  MAR 19  YoY %Change

Operational & Financial Ratios

   Earnings Per Share (Rs) 25.44 25.65 -0.83

   CEPS(Rs) 48.45 30.63 58.17

   DPS(Rs) 4.00 6.25 -36.00

   Book NAV/Share(Rs) 147.56 135.89 8.59

   Tax Rate(%) 32.61 31.07 4.94

Margin Ratios

   Core EBITDA Margin(%) 27.53 16.66 65.22

   EBIT Margin(%) 20.10 16.82 19.52

   Pre Tax Margin(%) 15.89 16.33 -2.73

   PAT Margin (%) 10.71 11.26 -4.89

   Cash Profit Margin (%) 20.39 13.44 51.70

Performance Ratios

   ROA(%) 10.91 14.96 -27.05

   ROE(%) 17.95 20.44 -12.21

   ROCE(%) 33.70 30.54 10.32

   Asset Turnover(x) 1.02 1.33 -23.30

   Sales/Fixed Asset(x) 2.47 5.55 -55.52

   Working Capital/Sales(x) 2.55 2.42 5.03

Efficiency Ratios

   Fixed Capital/Sales(x) 0.40 0.18 124.83

   Receivable days 7.56 9.59 -21.17

   Inventory Days 102.37 99.79 2.59

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Parameter MAR 20  MAR 19  YoY %Change

   Payable days 79.47 87.58 -9.26

Valuation Parameters

   PER(x) 48.40 54.91 -11.86

   PCE(x) 25.41 45.98 -44.74

   Price/Book(x) 8.34 10.37 -19.51

   Yield(%) 0.32 0.44 -26.78

   EV/Net Sales(x) 4.87 5.90 -17.44

Growth Ratio

   Net Sales Growth(%) 4.27 11.38 -62.48

EBIT Growth(%) 24.62 38.81 -36.57

   PAT Growth(%) -0.83 47.45 -101.75

   EPS Growth(%) -0.83 47.45 -101.76

Financial Stability Ratios

   Total Debt/Equity(x) 0.00 0.00 0.00

   Current Ratio(x) 2.50 2.92 -14.41

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 BATA INDIA Income Statement Analysis

 Operating income during the year rose 11.3% on a year-on-year (YoY) basis.
 The company's operating profit increased by 35.8% YoY during the fiscal.
Operating profit margins witnessed a fall and down at 16.3% in FY19 as against 13.3%
in FY18.
 Depreciation charges increased by 6.0% and finance costs decreased by 15.5%
YoY, respectively.
 Other income grew by 35.5% YoY.
 Net profit for the year grew by 49.2% YoY.
 Net profit margins during the year grew from 8.2% in FY18 to 11.0% in FY19.

Current Valuations for BATA INDIA

 The trailing twelve-month earnings per share (EPS) of the company stands at Rs
25.6, an improvement from the EPS of Rs 17.2 recorded last year.
 The price to earnings (P/E) ratio, at the current price of Rs 1,345.0, stands at 52.4
times its trailing twelve months earnings.
 The price to book value (P/BV) ratio at current price levels stands at 8.0 times,
while the price to sales ratio stands at 4.7 times.
 The company's price to cash flow (P/CF) ratio stood at 44.0 times its end-of-year
operating cash flow earnings.

Ratio Analysis for BATA INDIA

 Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.9x during FY19, from
2.8x during FY18. The current ratio measures the company's ability to pay short-term and
long-term obligations.
Interest Coverage Ratio: The company's interest coverage ratio improved and stood at
135.6x during FY19, from 81.2x during FY18. The interest coverage ratio of a company states
how easily a company can pay its interest expense on outstanding debt. A higher ratio is
preferable.
 Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 18.9% during
FY19, from 15.0% during FY19. The ROE measures the ability of a firm to generate profits
from its shareholders capital in the company.

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Return on Capital Employed (ROCE): The ROCE for the company improved and stood at
27.6% during FY19, from 23.1% during FY18. The ROCE measures the ability of a firm to
generate profits from its total capital (shareholder capital plus debt capital) employed in the
company.
Return on Assets (ROA): The ROA of the company improved and stood at 13.4% during
FY19, from 10.5% during FY18. The ROA measures how efficiently the company uses its
assets to generate earnings.

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 BALANCE SHEET

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BATA INDIA Balance Sheet Analysis

 The company's current liabilities during FY19 stood at Rs 6 billion as compared to

Rs 6 billion in FY18, thereby witnessing an increase of 12.3%.
 Current assets rose 18% and stood at Rs 18 billion, while fixed assets rose 7% and
stood at Rs 3 billion in FY19.
 Overall, the total assets and liabilities for FY19 stood at Rs 25 billion as against Rs
21 billion during FY18, thereby witnessing a growth of 16%.

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REFERENCES:

1. https://en.wikipedia.org/wiki/Bata_Corporation

2. https://www.goodreturns.in/company/bata-india/capital-structure.html
3. https://www.moneycontrol.com/stocks/company_info/print_main.php

4. https://www.financialexpress.com/market/stock-market/bata-india-ltd-stock-
price/financials-ratios/
5. https://in.finance.yahoo.com/quote/BATAINDIA.NS/history?
period1=1479081600&period2=1605312000&interval=1mo&filter=history&frequenc
y=1mo&includeAdjustedClose=true
6. https://www.indiainfoline.com/company/bata-india-ltd/historical-data/60

7. https://www.moneycontrol.com/financials/bataindia/capital-structure/bi01
8. https://www.indiainfoline.com/search/news/bata-india

9. https://www.angelbroking.com/get-html-
report/AngelBrokingResearch_BATA_IC_18062018.html
10. https://valueresearchonline.com/stocks/snapshot.asp?code=467
11. https://www.valueresearchonline.com/stocks/467/bata-india-ltd#snapshot

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