Bata profit spurts by 300 pc

The shoe manufacturer said net sales rose by 13.5 per cent to Rs 670.64 crore from Rs 590.50 crore in the previous year. Profit before tax went up to Rs 17.56 crore from Rs 4.15 crore. The company has made a provision for tax of Rs 92 lakh under MAT. Bata last paid tax in 1993, when it shelled out Rs 10.25 crore.

Operating profit margin has improved from five per cent to six per cent as expenses as a percentage of sales came down from 95 per cent to 94 per cent. Interest costs have been reduced to Rs 14.43 crore from Rs 19.30 crore in the previous year.

A senior company official explained that the improvement in gross profit of about Rs 13 crorewas largely on account of a reduction in overall expenses and interest costs by one percentage point each. Performance would have been better but for a fire at its main Batanagar factory near Calcutta, which disrupted production in early 1997. The fire damaged the thermopack department. New machinery was commissioned later in the first half.

To offset the loss of production, the company had to increase purchase of ready footwear from contract suppliers by 26 per cent.

The company has incurred capital expenditure of Rs 20 crore in the last two years, out of which Rs 13 crore was incurred in 1995. Capital expenditure has been incurred only in priority areas like store modernisation, essential machinery and improvement in management information systems.

Bata said a financial restructuring undertaken in 1996 and its successful rights issue in early 1997 helped significantly in reducing the interest burden. As a result, the debt-equity ratio has dropped below 0.4:1.

Bata’s six manufacturing plants are nowfocussed on popularly priced products. Last year, chairman A L Mudaliar had stated in clear terms that the company’s policy is to "maximise installed production capacity in its own manufacturing units and increase purchases from contract suppliers as sales demand increases."

The profit for the latest year is nearly in line with the figures turned out by Bata before the first signs of trouble appeared in 1994 and it reported a loss of over Rs 40 crore for the year 1995.