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The ‘FAA’ (pronounced ''F
double A’) rating assigned to the Fixed Deposit programme of Bata has been
reaffirmed.
The rating reflects the sustained
improvement in the company’s risk profile resulting from the successful
implementation of the turnaround strategy initiated by the company’s new management;
the company’s strong market position in the Indian footwear industry; its improving
operating efficiency and financial risk profile. The rating is, somewhat, tempered by the
instances of indiscipline by its workforce in the past and the company’s moderate
operating margins. The rating also factors in the company’s strong relationship with
its parent, Bata Shoe Organisation.
Bata India Limited (Bata) is the largest
footwear manufacturer in the country and produces a wide range of footwear such as canvas,
rubber, leather, plastic etc. While the company’s risk profile had deteriorated in
the mid 1990s due to the limited success of the it’s strategy of shifting business
focus towards the higher valued added segments, the company has subsequently successfully
implemented the business restructuring exercise strategy initiated by it in 1995. The
turnaround strategy has been aimed at reverting its focus back onto its well-established
positioning on the ‘high volume - value for money’ segment; streamlining the
marketing and organisational set-up; augmenting information systems and improving labour
productivity. During the year ending December 31 1998, the company reported a PAT of Rs.
238.2 million on a net sales of Rs. 7061.8 million.
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