Block deals selling 2.8% stake has no impact on Bata India: CEO


“The CEO talks about how an improved product mix and a move towards “casualisation” and “sneakerisation” has aided in improving margins. .Further, tightening belts and bringing in cost efficiencies in many parts of our operations is giving decent dividends. Price hikes has also helped counter the effects of inflation,” says , says Gunjan Shah, CEO, Bata.



It has been a robust Q4 for you, higher than expected margin expansion, largely on the back of the price hikes and the improved product mix that the company has taken. Do you believe that margins will continue to hold out while volumes may look a bit soft?
We managed to proactively manage those margins largely through three levers – one was to make sure that our product mix significantly improves, our move towards “casualisation” and “sneakerisation” has obviously aided that effort.

The second piece that has helped us is basically tightening our belts and bringing in cost efficiencies in many parts of our operations.That is giving us decent dividends.

The last piece that has helped us manage inflation is price hikes. All these three levers will continue. We will have to closely watch how inflation goes going forward but that is how I see the situation now.

Given the fact that we are seeing these unlocking trends really play out, schools have finally reopened. What kind of demand uptake have you seen in fashion footwear and formal footwear, specifically as categories?
There are certain short-term bounce-backs that are happening within the normalisation of consumer behaviour after the distortion of the last two years. With people going back to offices, schools as well as other fashion and marriage occasions are pushing the big time in terms of response and bounce back of fashion and formal footwear. The longer term trend, however, is the one that I just mentioned a little time back which is “casualisation” and “sneakerisation”.

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Consumers want the comfort that they have been used to for the last two years working from home. We have our portfolio in line with these trends and is also backed by the latest campaign that we have launched with this 24×7 casual collection along with our brand ambassador Disha Patani.

I am just going to clear the air for the benefit of our viewers. It is a question which keeps on getting asked when one sees a promoter exiting ownership. Can you tell us if this has nothing to do with business operations and their commitment towards India and is something which has happened in the promoter domain like the block deal yesterday?
Absolutely. It is nothing. It does not impact the majority control that the promoter has and it is just the simple small minor stake dilution which was in line with certain restructuring in the family trust. No impact whatsoever on India.

Let us understand your revenue target of Rs 5,000 crore by FY25. How would you achieve that? Is this largely an organic growth target which you are setting out?
No, it is an ambition and yes we do know a few levers that we will want to press upon which will aid us in the journey towards that kind of ambition and goal. There will be a few more levers that we will excavate as we go forward.

We do know certain white spaces that we want to get into. Let me talk about the levers that we know and we are working upon. One is the piece that I have somewhat hinted in the conversation till now, which is making sure that our portfolio moves in line with the categories that are going much faster.

On the entire piece on “sneakerisation,” we have seen some great response to the effort that has gone in the last six to eight months and the sneakers portfolio of ours has about 20% contribution and has grown at almost at 30% points faster than the overall category growth of ours.

The second big piece that we will also see gain traction going forward is in terms of our footprint expansion. The brand equity of Bata is extremely high. Amongst the brands that I have seen, I think it is one of the stratospheric levels in terms of awareness and consideration and it justifies a much wider footprint than the current footprint that we have of about 1,600 odd stores of exclusive outlets.

There were two things that we are trying to do on that – one is that aggressively expand our franchise stores and take us into smaller cohorts of consumers, etc, and whether that keeps our penetration into tier III to tier V towns and also leverage obviously the aspirations of middle India and rural India that is quickly ramping up.

The second piece also on footprint expansion is basically in terms of multi-brand outlets. Right now, distribution vertical caters to almost 25,000 outlets. The universe there is much larger. We go to about 1,000 towns and we have ramped both up but there is still a huge amount of headroom for expansion there. So both these will significantly aid expansion availability of Bata products and therefore revenue growth.

The third piece that is also going to fire and is doing reasonably well over the last three years is the entire digital footprint. Our e-commerce business is now in double digits contribution despite normalcy and retail offline taking off again.

We see this growing faster. Last quarter it grew fasterand I do not see a reason why it should not be significantly accretive to our growth. These are a few of the levers that will aid this entire journey. In addition to this, we will keep looking for inorganic opportunities in terms of white spaces where we feel there can be complementarity in terms of brands.

Your margins which were let us say just below 20 and I am keeping the Covid aberrations aside, I am looking at the normal trajectory it is now north of 24, is this is a cost cutting benefit, is this your premiumisation strategy which is working for us and is this the new normal, 20% plus?
We do not give forward looking forecast, however, I would like to highlight that we are not way off from our pre Covid normal. It is definitely not something that is an aberration per se. It is just reverting back to normalcy. Obviously, it is aided by a few efficiencies that we have gained; one is during the Covid period, the second is some more that we have basically tried to activate during this period that is aiding this. We would like to ideally make sure that these margins are not an aberration and remain stable.

Your market share is going to increase, particularly in the smaller towns and cities where you are going to become quite aggressive and take share from the unorganised market as well. Is that what you will be doing?
Yes, and that is what I hinted at when I talked about the footprint expansion, A large part of that footprint expansion will be in tier-3 to tier-5 towns. Last year, we added the largest number of exclusive Bata stores under franchise model. I do not see the space slackening. Maybe it will only accelerate going forward. We have added almost 20-30 stores every quarter for the last two quarters and I am assuming that this pace will continue if not accelerate.

Given a cost checking exercise, you have introduced flexi work hours in your stores and Bata already has 25 all women stores. Are you going to accelerate on that?
Absolutely. Diversity and inclusion is a big agenda for us. It makes the organisation and the company far more agile, far more receptive to ideas and this is a small initiative towards that. We have now got to 25 all women stores. We want to get them going even more and obviously aid the performance of the companies also.

The piece on flexi is slightly different; it is basically to do with the fact that consumer traction in our stores through the week and through the day is very different and therefore we want to make sure that we have that versatility and agility in our manning structures so that we are able to cater to the spikes in demand that happen through the week and therefore cater to it.



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