Bata Ducks Payout Third Time In A Row
Bata India, the country's premier shoe-maker which staged a remarkable turnaround in 1996, has decided not to pay any dividend for the year.
The company said it is still in the process of returning to profitability and has, therefore, decided to stay off the dividend list. Bata has recorded a profit of Rs 4.15 crore in 1996 from Rs 42.16-crore loss in the previous year. This is the third time in succession that the shoe major has decided not to declare any dividend. The last time Bata declared a dividend was in 1993 when it announced a 17.50 per cent payout.
The company's debt-equity ratio is also set to improve dramatically to 0.60:1 from 1.90:1 in December 1996, and 2.06:1 in December 1995. The improvement in the ratio has come about following the improved performance and a financial restructuring.
The company is likely to improve its position further as a result of the capital restructuring following the 1:1 rights issue.
The Bata management feels the healthy debt-equity ratio, together with the improved performance and a continuing trend towards more profitable operations, would allow it lower the cost of borrowings from banks and other lenders. The company, as a measure of financial restructuring, completed the 1:1 rights issue with a premium of Rs 20 per share in early 1997. The issue was oversubscribed marginally, despite depressed stockmarket conditions.
Following the rights issue, the company was able to inject Rs 75.30 crore into the company, which was deployed in reduction of debts from the banks and suppliers' accounts.
During the year, Bata redeemed debentures to the tune of Rs 6.4 crore to Citicorp and a Rs 10-crore term loan to Deutsche Bank. It also received a $10-million (Rs 34.35 crore) short-term loan as an advance against equity of $10 million (Rs 34.35 crore) in March, 1996, from the Amsterdam-based majority overseas shareholder, Bata (BN) BV.
In full exercise of the one-for-one rights, the holding company remitted Rs 4.99 crore in February, 1997, which, together with the earlier interest-free loan, has since been converted into equity. On the fixed deposits side, Rs 5.08 crore was outstanding as on December 31, 1996, against Rs 6.83 crore as on December 31, 1995.
Besides, Rs 3.24 crore was due for repayment of which Rs 1.90 crore was repaid while Rs 1.28 crore was renewed.
In fact, the company was almost able to match its projections in the rights issue letter of offer.
The company had projected a sales of Rs 600 crore, while it was able to notch up Rs 590.50 crore. Besides, Bata clocked a profit after tax (PAT) of Rs 4.15 crore, though the forecast was at Rs 2 crore.
The company's debt-equity ratio is also set to improve dramatically to 0.60:1 from 1.90:1 as on December 1996, and 2.06:1 in December 1995