Bata India Comes In For Flak Over Dividend Issue
Bata India's decision not to pay any dividend this year, despite turnaround in profits in 1996, drew considerable flak from shareholders at the company's annual general meeting held in Calcutta yesterday.
A L Mudaliar, chairman of Bata India Ltd, told shareholders, since the company is still in the process of returning to profitability with a modest profit of Rs 4.15 crore in 1996, the board had decided not to recommend a dividend this year.
The financial and operational restructuring undertaken by the company during 1995 started yielding results only last year. Sales growth achieved during last year was 11 per cent.
The financial recast culminated early this year with the completion of a 1:1 rights issue.
Following the rights issue, the company was able to inject Rs 75.30 crore, which was primarily deployed in reduction of debts from banks and suppliers' accounts.
"The company's financial position was strongly supported by Bata's Amsterdam-based majority overseas shareholder, Bata (BN) BV, which advanced a $10 million interest-free loan against equity in March 1996," Mudaliar said.
The first quarter of 1997 saw the company post a 19 per cent growth in production and a 16 per cent rise in sales.
He attributed the remarkable turnaround to a successful marketing strategy, restructuring and consolidation, introduction of new products and support from the shareholders.
Investments frozen
Bata India has decided to freeze all further investments in its Batanagar factory, said W K Weston, managing director of Bata.
The company has been facing problems with union forces in its factory premises over the utilisation of newly installed machinery.
Bata had invested around Rs 2 crore in March 1995 to install machinery to improve productivity.
However, the company has not been able to realise the desired productivity because of preventive measures taken by a certain section of the union.
Weston said the company would stall further investments till suitable steps were taken by the state government to solve the problem.