Bata mulls organic expansion, foray into rural markets

Bata India’s outgoing chairman P M Sinha has an ambitious vision. Sinha, who stepped down on Tuesday from Bata, wants to see the country’s best known footwear retailer growing its turnover, which stands at Rs1277 crore in 2010, four times within the next five years. “My ambition, and my board colleagues know about it, is that we should be four times the current turnover within the next five years,” Sinha said after the annual general meeting.

The ambitious plan, Sinha said, would be achieved through organic expansion only.

“The expansion plans as of now are all organic,” he said when asked if the plan factors in any possible domestic acquisition.

Sinha also strongly denied recent market rumours that a international footwear major is planning a takeover of Bata, which catapulted its shares to a 52-week high. “It’s totally a rumour…it’s not even a rumour, it’s a non-factual information. There is no question of Bata being taken over by Adidas or anybody else. There is no truth. If the market responds to our performance, don’t blame the rumour. Even when the Sensex was falling, Bata’s shares were rising,” Sinha said.

The foreign promoters currently hold about 52.01% stake in Bata India.

Focusing on rural and institutional sales, moving into Tier 2 and Tier 3 towns in a big way, maximising new shop growth in metros, reaching out to 140 new cities through distributors and
going to much smaller towns through wholesalers and
introducing new designs every three months are some of the major steps that would be taken to turn Sinha’s vision into reality.

Sinha, who was brought to head Bata India in 2004 after his stint with Pepsi as its South Asia head, stepped down on Tuesday as a non-executive chairman after scripting and successfully implementing a turnaround strategy. Uday Khanna, former managing director and chief executive officer of Lafarge India, took over as chairman during a board meeting following the shareholders’ meet. “Sinha always put tough targets for us. We will try to achieve it,” Khanna said.

Bata has just woken up to the virtues of the rural market, following the footsteps of the motorbike makers and the FMCG companies. The trigger has been the new-found affluence of the rural populace who are now demanding shoes and not hawai chappals, according to Sinha.

Bata’s rural foray, however, won’t mimic its presence in the cities where the brand is visible mostly in company-owned stores, currently numbering 1250 across the country.

In rural areas, the brand would find place in existing non-exclusive stores. “We will take up space within existing shoe stores and we will be merchandising the Bata brand using our own signage. We will be using the wholesaler system as well to take our shoes to the interior markets. We are still working on the plans but it would be very aggressive,” Sinha said.

“We have set up a focus team for rural expansion. We plan to reach out to about 150 places where we are present now. We have created new designs, new brands like Concertina for rural customers,” Sinha said.