BATA INDIA LTD

India is only second to China with a market share of 13%.The main challenge Indian footwear Industry is facing is imports of cheap footwear from China. Now with allowance of 100% FDI in single brand retail competition in the sector will increase but that is going to take some time. Bata is one of the largest and oldest footwear brands of India. Annual sales- 45 million pair of footwear Company has 5 manufacturing facility and company will invest Rs 25 crore to upgrade its production facilities. At present company is not focusing on improving margins. Number of retail stores-1200, company has a retail expansion strategy of opening 60 new retail stores every year and renovating existing stores. On an average the store size is of 3000 sq ft. Company is planning to open 120 large format retail stores and the cost to set up such stores is between Rs 40 -50 lakh. Sales Institutional sales Company has exclusive division of Bata India to meet the requirement of various industries viz hospitality, healthcare, aviation, education and government organisation. The division collaborates with corporate customers to design exclusive shoe lines under various national and international brands- HUSH PUPPIES, AMBASSADOR, COMFIT, SCHOLL, NORTH STAR and POWER etc. Company has come up with a patented MICROBAN technology which keeps shoes completely bacteria free. Urban wholesale Companys urban wholesale division consist of 12 depots across the country, 180 distributors and over 20000 independent shoe dealer Exports Company exports around 3 million pairs of shoes and other footwear annually primarily to Western Europe, Middle-East and Far-East markets. Majority of exports is canvass shoes to the customers in United Kingdom and France. Companys main product is Leather footwear followed by Footwear rubber/canvas pair and Footwear plastic. Percentage shareholding by promoter and promoter group as on 30 Sep 2011 is 52.011%. Company has been recognised as most trusted brand at 18th position among 16000 brands by Brand Trust report. Company declared 40% dividend during year 2010 i.e. Rs 4 per share.

Particulars

Net sales RM/Sales(%) operating PBIT PBIT Interest Interest coverage ratio EPS % inc over corresponding quarter Net sales operating PBIT PBIT EPS segment analysis % inc over corresponding quarter Footwear Revenue PBIT Capital Employed

Q1 ended Q2 ended Q3 31st March 2011 30th june 2011 30th sep 2011 (Rs in lacs except for EPS) 31065.60 42936.30 36998.60 19.59 17.39 18.06 3593.60 5924.30 4276.20 14786.30 6189.50 4528.20 16.00 17.60 24.90 0.0011 0.0028 0.0055 17.20 6.38 4.73

19.87% 75.59% 593.25% 663.23%

22.65% 54.14% 55.09% 58.31%

26.80% 50.49% 46.43% 46.90%

20.75% 73.76% 47.37%

23.53% 51.64% 66.09%

26.53% 45.35% 62.99%

As it can be seen from above table raw material cost is in control and Net sales, operating PBIT and EPS has shown increasing trend over corresponding previous quarters. Interest coverage ratio has also shown improvement from Q1 to Q3. However, operating PBIT and EPS has decreased in Q3 as compared to Q1. Abnormally high PBIT and EPS of Q1 is due other income of Rs 11192.7 lakh which abnormally high as compared to Q2 and Q3. The ROE 28.8% and ROCE of 43.1% of the company is highest among its peers also debt-equity ratio of 0.06 is quite low. 1 year return provided by companys share is 61.59% which quite good as most of its peers have given negative return

Five year chart As it can be seen in the above chart the stock has fallen more than 25% in last three months. The stock started rising since Feb 2011, touched 700 mark in Sep 2011 and Jan 2012 and now it is continuously falling. Stock is currently trading below 200 DMA. At current valuation investing in stock appears to be quite risky. It is advisable to buy the stock when it reaches 250-200.