Bata _India_ Ltd

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					GICS Industry: Textiles, Apparel & Luxury Goods l Sub Industry: Footwear l Website: www.bata.in




Bata (India) Ltd
Key Stock Indicators

NSE Ticker:           BATAINDIA           CMP (as on 08 Mar 2011—Rs/share):             345.1                  Shares outstanding (mn):                                    64.3
Bloomberg Ticker:     BATA:IN             52-week range up to 08 Mar 2011 (Rs)(H/L):    419.60/226.20          Free Float (%):                                             48.0
Face value / Share:   10.0                Market Cap as on 08 Mar 2011 (Rs mn):         22,177                 Average daily volumes (12 months):                          366,980
Div. Yield (%):       0.8                 Enterprise Value as on 08 Mar 2011 (Rs mn):   21,905                 Beta (2 year):                                              0.8
                                          Div. Yield (%):           0.0

    Bata India Ltd (BIL) was incorporated in 1931 as Bata Shoe Company Private Limited. It is one of the
    largest retailer and leading manufacturer of footwear in India and is a part of the Bata Shoe                       Key Financial Indicators
    Organization. BIL is involved in manufacturing of footwear and finished leather. The company also                                                                                Dec-07                      Dec-08                         Dec-09
    manufactures sports shoes, garments and accessories like shoe polish, socks etc. BIL’s
    manufacturing facilities are located in West Bengal, Haryana, Karnataka and Tamil Nadu.                            Revenue (Rs mn)                                               8,711.0                     9,952.5                       11,021.6
                                                                                                                       EBITDA ma rgins (%)                                               7.6                         9.8                           12.4
    KEY HIGHLIGHTS                                                                                                     PAT (Rs mn)                                                     362.2                       590.6                          625.8
                                                                                                                       PAT ma rgins (%)                                                  4.2                         5.9                            5.7
    Pan India presence with wide distribution network
    BIL is involved in manufacturing of footwear and finished leather. BIL’s manufacturing facilities are              Gea ring (x)                                                      0.2                         0.2                            0.1
    located in West Bengal, Bihar, Haryana, Karnataka and Tamil Nadu. It has a chain of ~1,500 retail                  EPS (Rs /s ha re)                                                 5.6                         9.2                            9.7
    outlets located in over 400 cities in India and 26 wholesale depots spread across the country. The                 PE (x)                                                           50.9                        11.7                           35.4
    company also operates a large non retail distribution network through its urban wholesale division
    through ~30,000 dealers. These outlets are serviced through six distribution centers managed
                                                                                                                       P/BV (x)                                                          8.5                         2.7                            7.4
    geographically and region-wise. Bata has also opened 108 new stores in CY10.                                       RoCE (%)                                                         20.1                        30.7                           36.3
                                                                                                                       RoE (%)                                                          18.7                        25.1                           22.8
    Strong support from parent                                                                                         EV/EBITDA (x)                                                    28.1                         7.2                           16.1
    Bata Shoe Organization (BSO) of Netherlands holds ~51% stake in BIL. BSO is one of the world’s
                                                                                                                       n.m. : Not meaningful
    leading footwear retailers and manufacturers with operations spread across 5 continents managed
    by 3 regional meaningful business units (MBUs). BIL has a strong parent support, a strong brand
    name supported by positioning and its large retail reach. BSO operates through 5000 retail stores                  Shareholding (As on December 31, 2010)
    and manages a retail presence ~70 countries and has 33 production facilities across 22 countries.                                                                                                                       DII
                                                                                                                               FII
                                                                                                                              15%                                                                                          15%                   Others
    Owns and markets several branded products                                                                                                                                                                                                     18%
    BIL’s product portfolio includes leather, rubber and canvas shoes, sports shoes, accessories and
    garments. BIL sells almost 59 million pairs a year in India and overseas markets such as USA, UK,
    Europe, Middle East and Far East. The company owns most popular brands viz. Power, Marie Claire,
    Bata School Shoes, Sandak, Bubble gummers, Bata Hawai and Bata Industrial. It also markets
    international brands like Weinbrenner, Hush Puppies, Dr Scholls, Reebok, Adidas and Azaleia.

    KEY RISKS
     •     Government liberalization and deregulation policies, in the shoe and leather industry
     •     Volatility in the raw material prices viz. raw hides, rubber, packaging material and chemicals
                                                                                                                                                         Promoter
           etc.                                                                                                                                            52%

     •     Intense competition from the regional players
                                                                                                                       Indexed price chart
                                                                                                                       (index)
                                                                                                                                                                                                                                    ('000)
     Stock Performances vis-à-vis market                                                                                180                                                                                                                       3500
                                                                                                                        160                                                                                                                       3000
                                                                           Returns (%)                                  140
                                                                                                                        120                                                                                                                       2500
                                                             YTD             1-m             3-m        12-m            100                                                                                                                       2000
    BATAINDIA                                                  76             11               -2         46             80                                                                                                                       1500
                                                                                                                         60
                                                                                                                                                                                                                                                  1000
    NIFTY                                                        6              4              -6          8             40
                                                                                                                         20                                                                                                                       500
                                                                                                                          0                                                                                                                       0
    Note:
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                                                                                                                                                                                                                                      Feb-11
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                                                                                                                                                                                                                           Jan-11
                                                                                                                                                                            Aug-10
                                                                                                                                                May-10




    1) YTD returns are since Jan 04, 2010 to Mar 08, 2011.
    2) 1-m, 3-m and 12-m returns are up to Mar 08, 2011
                                                                                                                                          Volumes (RHS)                                        BATAINDIA                                       NIFTY




                                                                                                                                                                                               CRISIL COMPANY REPORT | 1
 Bata (India) Ltd
 BACKGROUND

 A part of the Bata Shoe Organization, BIL was incorporated in 1931 as Bata Shoe Company Private Limited. The company went public in 1973, and subsequently changed its
 name to Bata India Limited. It is one of the largest retailer and leading manufacturer of footwear in India. BIL is involved in manufacturing and marketing of footwear and
 finished leather. The company also manufactures sports shoes, garments and accessories like shoe polish, socks etc. Bata owns brands like Power, Marie-Claire, North- Star,
 and Sundrops & Naughty Boy. The Company exports footwear to various countries such as the United Kingdom, Middle East, France, Papua New Guinea, Singapore etc.
 BIL’s production units are located in Batanagar (West Bengal), Faridabad (Haryana), Bataganj (Bihar), Mokamehghat (Bihar), Bangalore (Karnataka) and Hosur (Tamil Nadu).
 BIL’s manufacturing capacity for rubber and canvas footwear is 42.5 million pairs per annum (mppa), leather and other footwear is 20.3 mppa, finished leather from hides is
 1.6 mn pieces per annum.

 COMPETITIVE POSITION

 Peer Comparison

                                 Bata (India) Ltd.-         Crew B O S                                      Mirza
                                   (Consolidated)          Products Ltd.     Liberty Shoes Ltd. International Ltd.
                                           Dec-09               Mar-10                 Mar-10             Mar-10
  Revenue (Rs mn)                        11,021.6               4,653.2                2,690.3            3,791.9
  EBITDA ma rgins (%)                         12.4                 12.8                     9.4              16.0
  PAT (Rs mn)                                625.8                152.3                   41.2              187.9
  PAT ma rgins (%)                              5.7                  3.3                    1.5                5.0
  Gea ring (x)                                  0.1                  1.9                    0.8                0.7
  EPS (Rs /s ha re)                             9.7                20.0                     7.1                3.1
  PE (x)                                      35.4                   4.9                  11.8                 6.6
  P/BV (x)                                      7.4                  0.8                    1.0                1.1
  RoCE (%)                                    36.3                 12.6                     6.5              16.5
  RoE (%)                                     22.8                 12.0                     3.4              13.0
  EV/EBITDA (x)                               16.1                   5.8                    9.1                4.8
 n.m: Not meaningful

FINANCIAL PROFILE                                                                         Key Financial Indicators
Aggressive retail expansion and upgradation of wholesale business boosted the                                  Units               Dec-07         Dec-08         Dec-09
top-line in CY09                                                                          Revenue              Rs mi ll ion        8,711.0         9,952.5      11,021.6
In CY09, the top-line of the company grew at a rate of ~11% to Rs 11 bn vis-à-vis Rs      EBITDA ma rgins Per cent                      7.6             9.8          12.4
9.9 bn in CY08, mainly on account of higher volumes as the company is extending its       PAT                  Rs mi ll ion          362.2           590.6         625.8
reach by retail expansion, upgradation of collection and revamping its wholesale
business.                                                                                 PAT ma rgins         Per cent                 4.2             5.9           5.7
                                                                                          Revenue growth Per cent                      12.5           14.3           10.7
The operating margins have increased by 250 basis points (bps) in CY09 against CY08,
primarily driven by lower cost of raw material coupled with lower employee cost and       EBITDA growth        Per cent              285.9            46.9           40.1
power and fuel cost.                                                                      PAT growth           Per cent              539.5            63.0            6.0
Higher operating profits accompanied by lower interest charges, led to higher PAT to      Gea ring             Times                    0.2             0.2           0.1
Rs 625 mn in CY09 as compared to Rs 590 mn in CY08, a growth of ~6%.                      RoCE                 Per cent                20.1           30.7           36.3
                                                                                          RoE                  Per cent                18.7           25.1           22.8

 INDUSTRY PROFILE

 Textiles

 The textiles sector includes the apparel, home textiles, and technical textiles segments. The industry contributes around 4 per cent to India’s GDP and is also one of the
 major sources of export earnings for the country. The industry is expected to grow at a CAGR of 7-8 per cent, in volume terms, over the next 5 years, with the domestic
 market expected to be the main driver. This growth would be driven by growing urbanisation, increasing penetration of organised retail, increasing brand and fashion
 consciousness, and increasing number of working women.

 The industry, with the exception of manmade fibre intermediates, is characterised by the presence of small and fragmented units across the value chain. Policy reforms
 such as de-reservation of garment manufacturing after 2004-05 and provision of investment support under the Technology Upgradation Fund Scheme (TUFS) have been
 introduced to bring in consolidation and induce technological development in the industry in order to improve global competitiveness.

 Economies of scale, technology modernisation, level of integration across the value chain, value addition in products manufactured, and raw material sourcing abilities are
 key differentiating factors across players in the industry.




                                                                                                                                              CRISIL COMPANY REPORT | 2
Bata (India) Ltd
ANNUAL RESULTS

Income Statement                                                                                Balance sheet
(Rs million )                                Dec-07           Dec-08           Dec-09           (Rs million )                    Dec-07        Dec-08       Dec-09
Net Sales                                    8,651.8          9,861.2         10,944.7          Equity share capital               642.6         642.6        642.6
Operating Income                             8,711.0          9,952.5         11,021.6          Reserves and surplus             1,537.0       1,875.5      2,336.8
                                                                                                Tangible net worth               2,179.6       2,518.1      2,979.4
EBITDA                                           661.7            972.1           1,361.6       Deferred tax liablity:|asset|      -27.2        -174.7       -241.1
EBITDA Margin                                      7.6              9.8              12.4       Long-term debt                       0.0           0.0          0.0
                                                                                                Short-term-debt                    512.1         446.3        300.5
Depreciation                                     160.8            191.3            283.4        Total debt                         512.1         446.3        300.5
Interest                                          98.7            134.1             95.2        Current liabilities              2,360.7       2,342.8      2,416.4
Other Income                                      21.1             37.8             24.3        Total provisions                   623.6         589.0        583.2
                                                                                                Total liabilities                5,648.8       5,721.4      6,038.4
PBT                                              403.9            703.0            963.6        Gross block                      2,874.6       3,155.3      3,423.6
PAT                                              362.2            590.6            625.8        Net fixed assets                   681.5         859.6      1,009.7
                                                                                                Investments                        403.4         128.7        169.3
PAT Margin                                          4.2              5.9              5.7       Current assets                   4,563.9       4,733.1      4,859.4
                                                                                                Receivables                        228.6         261.3        254.5
No. of shares (Mn No.)                            64.3             64.3             64.3        Inventories                      3,535.5       3,520.7      3,468.0
                                                                                                Cash                               348.5         374.3        573.4
Earnings per share (EPS)                            5.6              9.2              9.7       Total assets                     5,648.8       5,721.4      6,038.4

Cash flow                                                                                       Ratio
(Rs million )                                   Dec-07        Dec-08              Dec-09                                         Dec-07        Dec-08       Dec-09
Pre-tax profit                                   423.3         684.4              1,007.3       Revenue growth (%)                 12.5          14.3         10.7
Total tax paid                                   -68.9        -260.0               -404.2       EBITDA growth(%)                  285.9          46.9         40.1
Depreciation                                     160.8         191.3                283.4       PAT growth(%)                     539.5          63.0          6.0
Change in working capital                        290.1        -195.9                140.6
                                                                                                EBITDA margins(%)                   7.6            9.8        12.4
Cash flow from operating activities               805.3            419.8          1,027.1       Tax rate (%)                       17.1           37.0        41.9
Capital Expenditure                              -298.3           -369.1           -433.7       PAT margins (%)                     4.2            5.9         5.7
Investments and others                           -280.8            274.7            -40.5
                                                                                                Dividend payout (%)                35.5           27.2        30.8
                                                                                                Dividend per share (Rs)             2.0            2.5         3.0
Cash flow from investing activities              -579.1            -94.4           -474.2       BV (Rs)                            33.9           39.2        46.4
Equity raised/(repaid)                            293.4              0.0              0.0       Return on Equity (%)               18.7           25.1        22.8
Debt raised/(repaid)                             -133.5            -65.8           -145.8       Return on capital employed (%)     20.1           30.7        36.3
Dividend (incl. tax)                             -150.4           -188.0           -225.6
Others (incl extraordinaries)                     -31.5            -45.9             17.6       Gearing (x)                          0.2           0.2         0.1
                                                                                                Interest coverage (x)                6.7           7.2        14.3
                                                                                                Debt/EBITDA (x)                      0.8           0.5         0.2
Cash flow from financing activities              -22.0            -299.7           -353.8
Change in cash position                          204.2              25.7            199.1       Asset turnover (x)                   3.1           3.3          3.4
Opening cash                                     144.3             348.5            374.3       Current ratio (x)                    1.4           1.4          1.5
Closing cash                                     348.5            374.3            573.4        Gross current assets (days)         191           173          161
n.m : Not meaningful;


QUARTERLY RESULTS

Profit and loss account
(Rs million)               Dec-10     % of Rev            Dec-09 % of Rev               Sep-10          % of Rev
No of Months                   3                              3                                3
Revenue                  3,619.8        100.0         2,925.5          100.0           2,966.9            100.0
EBITDA                     614.4         17.0             492.2            16.8             398.6          13.4
Interes t                    1.8          0.1               9.2             0.3               1.2           0.0
Depreci a ti on             97.9          2.7              96.4             3.3              89.4           3.0
PBT                        514.7         14.2             386.6            13.2             308.0          10.4
PAT                        343.9          9.5             254.0             8.7             207.2           7.0




                                                                                                                                           CRISIL COMPANY REPORT | 3
Bata (India) Ltd
FOCUS CHARTS & TABLES

       Rs mn                                        Quarterly sales & y-o-y growth                                                                       Per cent                 Rs mn
                                                                                                                                                                                                                     Quarterly PAT & y-o-y growth                                                                                   Per cent
        4,000                                                                                                                                                25                  400                                                                                                                                                    140
        3,500                                                                                                                                                                    350                                                                                                                                                    120
                                                                                                                                                                   20            300                                                                                                                                                    100
        3,000
        2,500                                                                                                                                                      15            250                                                                                                                                                    80
        2,000                                                                                                                                                                    200                                                                                                                                                    60
        1,500                                                                                                                                                      10            150                                                                                                                                                    40
        1,000                                                                                                                                                                    100                                                                                                                                                    20
                                                                                                                                                                   5
          500                                                                                                                                                                     50                                                                                                                                                    0
            0                                                                                                                                                      0               0                                                                                                                                                     -20




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                                                    Sales                                                Sales growth y-o-y (RHS)                                                                             Net Profit                                         Net profit growth y-o-y (RHS)


     Rs/share                                                                        EPS                                                                                        Per cent                        Movement in operating and net margins
       6                                                                                                                                                                         20
         5
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         4

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         2
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                                                                                                                                                                                                                            OPM                                                                            NPM

    Shareholding Pattern (Per cent)                                                                                                                                             Board of Directors
                  Mar 2010       Jun 2010                                                                              Sep 2010                       Dec 2010                  Director Name                                                        Designation
    Promoter           51.0           51.0                                                                                 51.0                           52.0                  Priya Mohan Sinha (Mr.)                                              Non-Executive Chairman
    FII                10.6           11.0                                                                                 12.9                           15.0
    DII                17.3           17.5                                                                                 17.1                           14.9                  Ma rcelo Villagran (Mr.)                                             Managing Director
    Others             21.1           20.4                                                                                 19.1                           18.1
                                                                                                                                                                                George Nigel John Clemons (Mr.) Promoter-Director


                                                                                                                                                                                Jorge Domingo Carbajal                                               Promoter-Director
                                                                                                                                                                                Gutierrez (Mr.)
                                                                                                                                                                                Uday Khanna (Mr.)                                                    Non-Executive Director
                                                                                                                                                                                Na ra yanan Sankar (Mr.)                                             Non-Executive Director
                                                                                                                                                                                Rajeev Gopa lakrishnan (Mr.)       Director
                                                                                                                                                                                Fa dzilah Bin Mohd Hus s ein (Mr.) Director-Fina nce


Additional Disclosure
This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).

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                                                                                                                                                                                                                                                                                             CRISIL COMPANY REPORT | 4

				
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