The Directors have pleasure to present the 81st Annual Report of your
Company covering the operating and financial performance for the year
ended December 31, 2013.
millions) (in Rs.
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
For the first time in its history, your Company''s Turnover crossed the
coveted mark of Rs. 20,000 Million. During the year 2013, your Company
achieved a total turnover of Rs.20,984.1 Million as compared to the
Turnover of Rs.18,717.5 Million in the year 2012 - reflecting a growth
of approx. 12.1%. Your Company recorded a Net Profit of Rs.1,907.4
Million for the year 2013, which was 11.2% higher than the Net Profit
of Rs.1,716.0 Million for the year 2012.
Your Company has witnessed constant growth over the past few years,
which endorses its strong understanding of the consumer needs and
lifestyle. Your Company has been relentlessly working on improving its
product offerings through constant research and development. The
footwear collection has vastly improved over the years and many
contemporary and fashionable designs of footwear have been launched.
The new designs have helped your Company to constantly increase its
customer base while meeting the changing lifestyle needs of the loyal
During the year under review, the manufacturing facilities of your
Company have also been upgraded with introduction of improved quality,
better technology and materials for producing footwear with a more
trendy look and comfort to meet the ever-changing market requirements.
In order to meet its demand for footwear, your Company has also tied up
with various manufacturers to produce shoes as per its own designs and
quality standards. Modernization of factories is an on-going process in
your Company and the same shall continue in the future.
In its strategic pursuit, your Company continues to open approx. 100
new retail stores every year across India and shut down or relocate
unviable stores. Most of the new stores are of large format having
space of more than 3,000 sq. ft. and delicately designed to display
each category of footwear and accessories. These large format stores
provide an excellent ambience and delightful shopping experience to the
customers. During the year under review, your Company opened 95 new
stores, including the largest footwear store in India at Viviana Mall,
Mumbai, covering an area of approx. 28,000 sq. ft. Your Company is
accelerating its growth focusing on tier II and tier III cities where
the potential for growth is significant.
The improved performance of your Company over the past few years is a
testimony to the fact that the Company is moving in the right direction
and has adopted the right model of growing its business. The Indian
market offers great opportunities and challenges as well. As the Indian
consumers become more and more demanding in their choices, preferences
and tastes, your Company will also gear up to seize these opportunities
and face the challenges with appropriate strategies. Key Priorities of
your Company for the year 2014 shall be to expand its presence in
existing markets as well as in tier II and tier III cities in India.
Footwear offerings shall continue to focus on the latest fashion and
trend at affordable prices to attract and serve the younger generation
TRANSFER TO RESERVES
Your Company has transferred a sum of 190.7 Million to General Reserve
against Rs.171.6 Million transferred last year.
The Board of Directors have recommended a final dividend of Rs 6.50 per
share (i.e., 65% on an equity share of Rs.10/- each) for the year ended
December 31, 2013, as against Rs.6.00 (i.e.,60% on an equity share of
Rs.10/- each) paid last year. The payment of aforesaid dividend is
subject to approval of the shareholders at the ensuing Annual General
Meeting of the Company and if declared, shall be paid to the
shareholders from June 04, 2014 onwards.
During the year under review, your Company has transferred to the
Investor Education & Protection Fund (IEPF) of the Central Government
the entire amount of Rs. 306,808/- as matured fixed deposits and
interest accrued thereon, which remained unclaimed/unpaid for a period
of more than seven years, despite several reminders and communications
from the Company. Accordingly, your Company has no unclaimed/unpaid
matured deposits or interest thereon as on December 31, 2013. Presently
the Company is not accepting any fixed deposits.
During the year under review, ICRA Limited has reaffirmed the rating of
[ICRA] A1 (pronounced as ''ICRA A one plus'') to your Company for its
Commercial Paper (CP) programme. This is the highest-credit quality
rating assigned by ICRA Limited to short term debt instruments. ICRA
Limited has also reaffirmed the rating of [ICRA] AA (pronounced as
''ICRA double A'') to your Company for its Line of Credit (LOC) limits of
fund based/non-fund based facilities sanctioned by the Banks. The
outlook on the assigned rating is ''Positive.''
AWARDS AND RECOGNITION
Your Directors are pleased to inform that your Company continues to
maintain its leadership position in the organized footwear industry in
India. Your Company has been the recipient of several awards and
recognitions. During the year under review, your Company received the
following Awards and Recognitions:
(i) Brand Equity - The Most Trusted Brand of 2013:
''BATA'' has bagged the No. 1 position in the FOOTWEAR category - This is
the second consecutive year that your Company bagged the No.1 spot. The
brand BATA was catapulted in ranking from 27th position in 2012 to 16th
position in 2013 - an improvement of 11 positions in overall ranking
amongst the top 100 brands in India.
(ii) Images Shoes & Accessories Award- 2013:
Bata India has been awarded Images Most Admired National Footwear
Retail Chain of the Year.
(iii) India''s Most Attractive Brand 2013:
Bata India has been ranked at the 11th position by DNA Newspaper on the
basis of a survey conducted by research firm TRA amongst the top Brands
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) is a continuous commitment of
your Company for overall economic development and well being of the
Country. CSR plays an important role in sustainable growth of your
Company and ensures that your Company discharges its duties towards
development of the society. As a good corporate citizen in India, your
Company participates in initiatives that preserves and protects the
environment and natural resources. Your Company is one of the leading
Members of the Bata Children''s Program (BCP) of Bata Shoe Organization,
which contributes immensely to the development and well being of
under-privileged and differently-abled children, specially the girls,
across the World.
Your Company has been engaged in various CSR activities throughout the
year. During the year 2013, CSR activities undertaken by your Company
included the following:
1. Arranged for relief material & assistance for the flood-hit victims
at Uttarakhand. Approx. 15 tons of relief material including food,
utensils, warm clothes and blankets were distributed amongst the
survivors of disaster victims at villages in Haridwar and Dehradun.
2. Organized Blood Donation Camps at the corporate office at Gurgaon
and at manufacturing units. General Health Check-up was conducted for
underprivileged children at various schools at Gurgaon and Batanagar.
3. Organized Self-Defense Training for underprivileged school girls in
Gurgaon. These underprivileged girls learnt easy self-defense tricks
through the volunteers to handle difficulties with simulations on
managing untoward situations. The training workshop boosted the
confidence of these girls and shall help them fight against various
odds and challenges that they face in their daily lives.
4. Conducted Hepatitis-B Vaccination Campaigns at Jharsa Village,
Gurgaon. More than 280 kids were vaccinated against Hepatitis-B which
is a serious disease caused by a highly infectious virus that attacks
the liver which can lead to severe illness, liver damage, etc.
5. Organized a Tree Plantation Drive at Aravalli Bio Diversity Park,
Gurgaon. Approx. 700 trees were planted by the volunteers along with
enthusiastic school children who were introduced to the wonders of
nature and respect for sustainable resource management. Your company
had also organized ''Bata Walks Green'' Campaign in manufacturing units.
Our volunteers planted saplings across our factories to spread
awareness about environment protection, sustenance, and eco-conscious
6. Govt. Girls Primary School, Gurgaon and Primary & KG School at
Batanagar were renovated. A multi-purpose Auditorium and a new Computer
lab had been introduced to the students of Batanagar Primary & KG
School. The renovation at Govt. Girls Primary School included hygienic
classroom, safe & comfortable furniture, neat and clean classrooms with
cartoon characters painted and educational messages written on walls by
7. Under the BCP India initiatives, successfully launched a
sustainable employee volunteering initiative - Each One Teach One
Campaign to create awareness on the rights of a girl child, moral
values, co-curriculum and sport activities. 30 employees of the Company
are volunteering 1 hour weekly to teach underprivileged girls in a
Primary School in Gurgaon.
8. Rain Water Harvesting projects of your Company continued near Bata
House, Gurgaon and at its Hosur Unit, where rain water collected from
the plot is being used for recharging of borewell and rain water
collected from the roof is being used for washrooms and in lawns and
Your Board is aware that the Government of India has included Section
135 under the new Companies Act, 2013, encouraging certain class of
companies in India to spend 2% of average net profits of three years
towards CSR. The provisions of the new Act are yet to be notified. Your
Company will take appropriate steps to meet the requirements under the
Companies Act, 2013 in due course.
The process of opening large format stores and renovating the existing
stores to foster contemporary appeal continued during the year 2013.
Your Company has opened 95 large format stores (approx. 3000 sq. ft. or
more) and renovated/ relocated / closed unviable retail stores across
India. The strategy adopted by your Company has resulted in higher
sales and profitability year-on-year as demonstrated in financial
results of the Company.
Your Company continues to introduce contemporary and fashionable
designs in its product range. Special attention has been provided to
improve the quality and style of footwear in each category. In every
season throughout the year 2013, your Company improved its footwear
collections in stores to suit the needs and desires of the customers.
An exclusive range of ladies footwear and a variety of products for the
kids and children were launched, which have been well accepted by the
customers. Your Company continued to be the market leader in Men''s
formal footwear, with Ambassador, Comfit, Moccasino - all brands
recording a high growth. In ladies segment, Marie Claire and Sundrop
brands of footwear have recorded a good growth. Your Company''s footwear
range for the children - Bubblegummer and Angry Birds continued to be
the most favourite brands in India. Evergreen brands of your Company,
viz., Power, North Star, Scholl and Weinbrenner - all have registered
growth in volume in the year 2013 as compared to the previous year
Your Company''s premium Brand - Hush Puppies has been expanding in line
with the overall retail expansion program and continues to open
exclusive stores and shop-in-shop stores in premium departmental
stores. At the end of year 2013, Hush Puppies had 34 exclusive stores
and 37 shop-in-shops. Hush Puppies lives the brand vision of Treating
the World to their favorite shoes with exclusive retail stores, unique
products and exciting brand image. Hush Puppies range of footwear shall
continue to focus on comfort with contemporary styling, to attract
younger consumers to the brand. Your Company shall invest in various
marketing plans to re-position the brand in the minds of consumer as
international premium lifestyle casual footwear brand in India.
Your Company''s new retail concept - FOOTIN offers a new range of
footwear focusing on affordable fashion and trendy styles. In FOOTIN
stores, customers can get fashionable, young looking and affordable
footwear presented through a high-density display concept. It is one of
the new business models with a different approach to improve volume
growth of your Company. During the year under review, your Company has
opened 8 new FOOTIN stores across India, with a new range of footwear
for both men and women focusing on fashionable and trendy styles at an
affordable price. These stores are unique in terms of display and
ambience and different from other footwear retail stores in India.
The year 2013, certainly would be counted among the most active years
for E-commerce division of your Company. Your Company generated a
volume growth of almost 100% in on-line business during the year 2013
as compared to the previous year 2012. Your Company''s E-Commerce
business reached approx. 750 cities across India with its shipments. In
order to attract more e-customers, new partnerships have been entered
into by tying up with leading on-line players e.g., Flipkart, Jabong,
E-bay, HomeShop18, Myntra, Rediff, Indiatimes, etc. As a part of the
strategy, Cash on Delivery service was launched for the end customer to
facilitate the shopping ease. Your Company''s website www.bata.in has
experienced a tremendous growth in traffic of approx. 2.5 Million
visitors. Customer Service remained a focused area for the E-Commerce
business of your Company with a dedicated team continuing to serve its
Your Company will further strengthen its E-Commerce business and
establish lasting relations with the existing and new partners. The
focus would remain on customer service and swift operations to ensure
that the customers get their footwear in good condition and well in
time. The existing website www.bata.in shall also be upgraded with new
and exciting features for the customers. High importance is being given
to the social media network to ensure that the customers on the social
platform are satisfied with the product and services being rendered by
Your Company''s Industrial division is now recognized as the leading
supplier in the safety footwear market. Not only has the division
expanded its coverage in the market but also is focused towards
upgrading the market with newer technology products. The product range
has been refreshed by launching new moulds as well as new PU-Rubber
sole collection. The customer service function has been strengthened to
provide immediate response to the queries raised by the industrial
Your Company''s Institutional business has recorded better results in
the year 2013 as compared to the previous year. The strategy to focus
on segments like defence, canteens, education, corporate, etc. has been
fruitful and resulted in achieving good market penetration. A new range
for the healthcare segment has been launched with specialized footwear
to be used in hospitals for Doctors, Nurses, front office staff,
maintenance team, etc.
CUSTOMER CARE INITIATIVES
During the year under review, your Company has further strengthened its
customer care division. Effective and satisfactory customer service
continued to delight the customers at various points, i.e., starting at
retail stores, during the sale interaction, post sales services at
Customer Help Desk and obtaining feedback from the customers. A new
initiative - Passion to Serve program has been adopted for the sales
personnel which entitles them to periodic promotions. An exclusive
Customer Help Desk has been in place to assist the customer and to
locate stores, inform product availability, process online orders and
to acknowledge all their valuable feedback. On the Digital Space,
through Facebook, your Company has entered into over 100,000 customers''
personal space and acquired more than 150,000 Like on Bata Facebook
Your Company''s Export sales in 2013 were Rs.147.1 Million compared to
Rs.149.8 Million in 2012. Various plans are being explored to improve
Export volume of the Company in the future.
Your Company has a well-organized Supply Chain team at its Corporate
Office in Gurgaon which controls the demand planning, replenishment,
transportation and warehousing operations. Introduction of a new Supply
Chain Planning processes has been the key highlight for the year 2013.
Critical initiatives on implementation of new Supply Chain Planning
processes will ensure right products at right stores at the right time
in right quantities and right sizes, which will improve efficiency and
reduce cost of holding inventory. This process is being implemented in
a phased manner and shall cover all the Retail Distribution Centers
(RDCs) of your Company. This initiative will reduce the out of stock
events at retail stores thereby improving the customer service levels.
Supply Chain team has also undertaken an initiative to consolidate all
the warehouses in Delhi NCR region. A detailed modernization and
consolidation plan of warehouses in other regions also has been planned
in the current financial year.
The Capital Expenditure incurred during the year amounted to Rs. 774.6
million in 2013, which was predominantly due to opening of a number of
new stores and modernization of existing stores. Capital Expenditure
has also been incurred for installation of machinery and moulds to
modernize our factories.
INDUSTRIAL RELATIONS AND PERSONNEL
Your Company has continuously been working to improve human resources
competencies and capabilities in the company, which is critical to
achieve results as per the plan. Major initiatives and interventions to
this effect as taken up during the year 2013, are as under:
Building up the best team in all functional areas
During 2013 your Company has hired 171 middle and senior level
Executives for its various functional areas to replace the people
moving out, retiring, etc. with professionals having better
qualifications and experience.
Creating bench strength and building up capability for future growth
Executive Development plan
For the fourth consecutive year, your Company pursued its aim of
nurturing and developing new talent for various responsibilities. Eight
Executive trainees have been hired from various retail management
schools and trained for 9 months under the Executive Development Plan
(EDP). Five Executive Trainees, who successfully completed their
training under EDP, have been placed as District Managers across retail
Training and Development
a) District Manager Training
Developing and Training of internal talents continued to be the focus
area of your Company. 96 nominated District Managers across all retail
chains attended 2 days District Managers'' Training program.
b) Training of Store Employees and Store Managers/K-Scheme Agents
Imparting Training to store employees to improve their knowledge and
skill levels with an objective to provide better customer service in
retail stores remained a key focus are in the year 2013. Training was
conducted for 1,251 store employees and 317 K-Scheme Agents/Store
Managers to enhance their performance and effectiveness.
The Earning per Share (EPS) (Basic and Diluted) of your Company at
Rs.29.68 reflects an increase by approx. 11% as compared to EPS of
Rs.26.70 in the previous year. As informed earlier, since April-2010,
your Company does not have any Bank Borrowings and the entire capital
expenditure has been funded through internal sources.
RESEARCH & DEVELOPMENT ACTIVITIES AND ENERGY CONSERVATION
Your Company continued its local Research & Development activities
during the year under review. These R&D activities included
technological improvement in all key areas, e.g., product development,
process development, material development, footwear moulds, etc. with
emphasis on creating a pollution-free work environment. Total
expenditure incurred on Research & Development was approx. Rs. 7
Million during the year. Your Company continues to actively pursue
energy conservation measures. During the year under review, savings of
energy cost worth approx. Rs.5.5 Million was achieved through
replacement of conventional tubes with energy efficient lights,
installation of energy efficient screw compressors and adopting other
measures in its manufacturing units.
SUPPORT FROM BATA SHOE ORGANIZATION
Your Company continues to receive assistance and benefits of technical
research and innovative programmes of Bata Shoe Organization (BSO)
through Global Footwear Services Pte. Ltd., Singapore (GFS). Your
Company has renewed the Technical Collaboration Agreement with GFS with
effect from January 01, 2011 for a period of ten years. In terms of the
said Technical Collaboration Agreement, your Company receives guidance,
training of personnel and services from GFS in connection with research
& development, marketing, brand development, footwear technology,
testing & quality control, store location, layout & design,
environment, health & safety, risk & insurance management, etc. Your
Company continues to obtain expertise and experience from the visiting
senior personnel of GFS and other BSO group companies to improve its
product range and operational processes throughout the year.
In terms of the renewed Agreement as aforesaid, your Company has paid a
fee of Rs.185 Million to GFS during the calendar year 2013.
The Statutory Auditors of the Company - Messrs. S. R. Batliboi & Co.
LLP, Chartered Accountants, retire at the ensuing Annual General
Meeting of the Company and have given their consent for re-appointment.
Your Company has also received their confirmation pursuant to Section
224(1B) of the Companies Act, 1956.
In compliance with the Central Government''s Order dated November 06,
2012, your Board at the Board Meeting held on February 26, 2013 has
re-appointed M/s. Mani & Co., Cost Accountants to carry out the Cost
Audit of the Company in respect of Footwear. However, the Cost Audit
Branch of the Ministry of Corporate Affairs, Government of India is yet
to make the said Order effective. Your Company will file e-Form 23C as
and when the said e-Form 23C is modified by the Central Government in
line with the aforesaid Order.
The Cost Audit Report of the Company for the financial year ended
December 31, 2012 was filed by M/s. Mani & Co., with the Cost Audit
Branch, Ministry of Corporate Affairs, Government of India, on June 11,
There has been no change in composition of your Board of Directors
during the year under review. The Ministry of Corporate Affairs,
Government of India has included various provisions under the Companies
Act, 2013 relating to composition of the Board of Directors and
Committees of the Board of Directors of Indian companies. However,
these provisions of the Act are yet to be notified. Your Company will
take appropriate steps to reconstitute its Board of Directors and
Committees thereof to comply with the requirements of the new Companies
Act, 2013 and Rules framed there under in due course.
In terms of the provisions of the Companies Act, 2013 (to the extent
applicable), your Board of Directors at their Meeting held on October
30, 2013 appointed Mr. Rajeev Gopalakrishnan, Managing Director as the
''Chief Executive Officer (CEO)'' of the Company with immediate effect.
At the said Board Meeting your Board has also appointed Mr. Ranjit
Mathur, Director Finance as the ''Chief Financial Officer (CFO)'' of the
Company with immediate effect.
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of your Company, Mr. Jorge Carbajal and Mr.
Akshay Chudasama, Directors of the Company are due to retire by
rotation at the ensuing Annual General Meeting of the Company and being
eligible, offer themselves for re-election. The Board of Directors of
your Company are of the opinion that their continued association with
the Board will be beneficial to the Company and recommend their
STATUS OF BATANAGAR PROJECT
In terms of the Order of the Government of West Bengal, total
obligation on the Company towards development of employee housing
colony at Batanagar was Rs.650 Million. The Company has already
received 315,000 sq. ft. of constructed space at Batanagar Project from
Riverbank Developers Private Limited (RDPL), the developers of the
project and had recorded a liability of Rs.216.2 Million in earlier
years for obligation yet to be fulfilled towards the balance 325,000
sq. ft. constructed space. As per the Development Agreement entered
into between RDPL and the Company in the year 2010, any liability
arising on account of non-compliance of the terms and conditions of the
aforesaid Order of the Government of West Bengal will be borne by RDPL.
Your Company alongwith RDPL has approached the Government of West
Bengal for extension of the time limit for completion of Batanagar
Project, and obtained their in-principle approval. The revised Order is
awaited. During the year, the Company has signed an Addendum to the
aforesaid Development Agreement whereby the Company shall receive
332,030 sq. ft. of constructed space in Batanagar Project against the
balance 325,000 sq. ft. of constructed space from RDPL.
DIRECTORS'' RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF
THE COMPANIES ACT, 1956
Your Directors hereby confirm:-
i) that in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year, and of the
profit of the Company for that period;
iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
iv) that the Directors have prepared the Annual Accounts on a going
Bata Properties Limited and Coastal Commercial & Exim Limited continue
to be wholly owned subsidiaries of your Company. In terms of the
Circular No.2/2011 dated February 8, 2011 issued by the Ministry of
Corporate Affairs, Government of India, your Board of Directors at
their meeting held on February 12, 2014 have given consent for not
attaching, inter alia, the Balance Sheet, Statement of Profit and Loss
and other relevant reports and statements of its subsidiary companies
to the Balance Sheet of your Company as on December 31, 2013 and have
also agreed to comply with the conditions prescribed in the said
The Annual Reports-2013 of the aforesaid subsidiaries will be made
available to the shareholders of the Company upon receipt of written
requests from them. The Annual Reports-2013 of the aforesaid subsidiary
companies will also be kept for inspection by the shareholders of the
Company at the Registered Office of the Company and its subsidiaries
and also at the Company''s Office at 27B, Camac Street, 1st Floor,
Kolkata - 700 016 between 09:30 a.m. and 12:30 p.m. on any working day.
In compliance with the requirements of the aforesaid Circular, a
Statement showing relevant details for the year ended December 31, 2013
in respect of Bata Properties Limited and Coastal Commercial & Exim
Limited, the wholly owned subsidiaries of the Company have been
included in the Financial Statements of the Company which forms part of
this Annual Report.
In compliance with the provisions of Clause 49 of the Listing Agreement
with the Stock Exchanges, the Corporate Governance Report of your
Company and Corporate Governance Compliance Certificate received from
M/s. S. R. Batliboi & Co., LLP, Chartered Accountants, the Statutory
Auditors, are attached as separate Annexure to this Report.
Your Board places on record its sincere appreciation for the
co-operation and support received from investors, shareholders,
customers, business associates, bankers, vendors as well as Regulatory
and Government authorities.
Your Board would like to thank the major Shareholder and other group
companies of Bata Shoe Organization for their guidance, support and
co-operation in smooth operations of the Company. Your Board is ever
grateful to the independent Directors for sharing their valuable
experience and wisdom with the Management in the process of finalizing
strategic decisions and oversight of the Company.
Your Board appreciates the invaluable contribution of the Senior
Management Team for their leadership and all the employees of the
Company for their indefatigable efforts which plays a pivotal role in
achieving the objectives of the Company.
For and on behalf of the Board of Directors
Place : Gurgaon Uday Khanna
Date : February 12, 2014. Chairman