Bata turns the corner
Issues first dividend in five years.
Forever in dire straits, Bata India finally seems to have turned the corner. The Company recorded a gross turnover of Rs 890cr in calendar 2007 – up by a substantial 12% from Rs 794cr a year earlier. The quarter ending Mar 08 showed an even higher growth (y-on-y) at 19.8%. Profits were up by 18% to Rs 47.44cr. The good cheer on the Bata's platinum jubilee (75 years inspired shareholders to confirm a 15% dividend – the first in five years.
Bata honchos credited their policy of modernization and retail restructuring started in 2004 for the turn around. Future plans would continue along these lines. Over 200 stores, located in new untouched areas, are being planned over the next year. This year alone, 60 new shops and 30 upgrades are expected. An expenditure of Rs 480cr is in the offing for this. The focus will shift from Bata's old strength, family outlets, to large format stores. These new concept stores will be spread between 3,000 to 10,000 sqft. Franchising these new behemoths would help Bata side-step the Rs 2cr required for interiors. Smaller shops will be financed through cash accruals. Bata already operates 1100 stores run almost entirely by Company staff.
In a sign of the time, Bata India has sold off its Hawai brand to Brazilian company Alpragatas for Rs 3.90cr. The Company blamed cheap duplicates in the unorganized sector.
Failed JV's leave Indian retailers unfazed
Pantaloon gets out of one and into another Still seen as a foreign concept, modernization of Indian retail resulted in a number of JV's between foreign and Indian corporates. Some of these have got unstuck. This has not shaken the appetite of Indian retailers for more.
Arvind Mills and Diesel BV of Italy finally called it quits for their JV (Diesel Fashion India Arvind) of just over a year (Apr 2007). Diesel had a 51% controlling stake. The official reason given was that both parties felt that the agreement would restrict their future expansion plans. More than likely, there was a conflict of interest on overlapping product groups: casual apparel for men and women, bags, women's lingerie, innerwear for men, watches, jewellery and shoes.
Pantaloon Retail did not hold back its punches when it blamed UK based Lee Cooper for pulling out of their JV (see Rakesh Biyani's statement in the box). The Future Group will, however, continue to sell Lee Cooper products in India under the licencing arrangement with the UK company. Currently there are 32 exclusive stores and the brand is also available in MBO's. The JV, set up in 2006, was an equal partnership between Lee Cooper and Indus League Clothing, a Future Group company.
The news of failed JV's hardly seem to faze Indian retailers who are seeking more tie-ups:
Pantaloon Retail formed an equal JV with French apparel firm, Celio. This would add one more brand in the retailer's arsenal. It is being positioned between mass and luxury.
Contributed by:Nithin Narayanan