Itc Casts Shadow Over Bata Rights
The Securities and Exchange Board of India (Sebi) has directed Bata India to include an additional risk clause in its rights offer document stating that one of its former directors J N Sapru had been investigated by the enforcement directorate for alleged Fera violations.
Sebi wanted the company to list the detailed charges against Bata director J N Sapru in the offer document while Bata contended that the Directorate was yet to file detailed charges against Sapru.
However, the issue was sorted out partially when Sapru decided to step down from the Bata board a couple of days back. Faced with the reservations voiced by Sebi, the company decided to include a clause saying that an ex-director of the company was out on bail following the framing of Fera violation charges against him.
The company will be issuing the letter of offer later this month to raise Rs 77.14 crore through a rights issue at Rs 20 per share.
Bata sources admitted that Sebi had raised some issues, but the company was going ahead with the issue. "We would not like to comment further and all the questions will be answered in the offer letter which will be issued shortly," a source in Bata said.
Bata proposes to pay off its debts through the proceeds of the issue. The company had been lent Rs 35 crore earlier this year in March from its parent company to tide over its financial crisis.
Bata expects to bounce back into the black by the end of the current financial since its sales have strong despite stiff competition from foreign as well as other shoe companies. The new Bata management has taken major restructuring measures, including cost cutting, improving distribution logistics, strengthening marketing and launching new products. Bata had raised Rs 15.68 crore from overseas banks syndicated by Citibank International plc, London, to finance its capital expenditure. The shoe major has had its fair share of labour trouble.
Faced with continual labour discord, the Bata management has reportedly threatened to shut down its Batanagar plant and has sought immediate intervention by the West Bengal government to check violence by a section of the Bata employees.