Your Directors are pleased to present the 89th Annual Report covering theoperational and financial performance of your Company along with the Audited FinancialStatements for the financial year ended March 31 2022.
FINANCIAL HIGHLIGHTS & PERFORMANCE
|Particulars ||Financial Year ended on March 31 2022 ||Financial Year ended on March 31 2021 |
| ||(Audited) ||(Audited) |
|Revenue from operations ||23877.19 ||17072.99 |
|Other Income ||558.97 ||940.35 |
|Total ||24436.16 ||18013.34 |
|Profit / (Loss) before Taxation ||1368.27 ||(1176.93) |
|Provision for Taxation ||359.40 ||(274.13) |
|Net Profit / (Loss) ||1008.87 ||(902.80) |
|Other Comprehensive Income / (Loss) (net of tax) ||(4.35) ||48.85 |
|Total Comprehensive Income ||1004.52 ||(853.95) |
Your Company has prepared the Financial Statements for the financial year ended March31 2022 in terms of Sections 129 133 and Schedule III to the Companies Act 2013 (asamended) (the "Act") read with the Companies (Indian Accounting Standards)Rules 2015 as amended.
During the first half of the year under review the operations and consequentialfinancial performance of your Company was impacted by the second wave of Covid-19. YourCompany witnessed significant recovery in demand during the latter part of the year underreview in the backdrop of improvement in consumer sentiments resulting from pent up demandand increase in footfall due to deeper understanding of the pandemic availability ofvaccines and faster easing of restrictions. Overall during the financial year ended March31 2022 your Company achieved a turnover of Rs. 23877.19 Million as compared to theturnover of Rs. 17072.99 Million recorded during the previous financial year ended March31 2021 registering a growth of 39.85%. Your Company posted a profit of Rs. 1008.87Million for the financial year ended March 31 2022 as against the Net Loss of Rs. 902.80Million for the financial year ended March 31 2021.
On a consolidated basis your Company reports a turnover of Rs. 23877.19 Millionduring the financial year ended March 31 2022 and a consolidated Net Profit of Rs.1029.93 Million for the said financial year.
Your Company continues to be Indias leading footwear brand. Your Company retailsthrough a PAN India network of 1569 Stores in over 640 cities and over 230 Shop inShops (SIS).
During the year under review your Company focused on six major thrust levers - DrivingPortfolio Evolution Accelerating Expansion via Franchise & Distribution MarketingInvestments Exploding Digital Footprint Agile & Efficient Supply Chain and onStaying nimble on costs with Talent Process Technology investments at the core. As IndiaInc. moved towards hybrid working model a distinct change in consumer preference towardscasual and sports footwear was noticeable and accordingly portfolio expansion andinnovation in comfort design and materials were undertaken during the year under review.With consumers preferring sneakers your Company strengthened its sneaker proposition byrolling out new Sneaker Studios to display upto 300 styles 9 brands in stores& on our website. Sneakers thus led the sales during the latter part of the yearunder review with brands such as Power and North Star leadingsales in this category. Your Company also launched Floatz a casualwashable and comfortable footwear which received encouraging response. Your Companyexpanded its physical footprint through MBO route as well as through Franchise route andits digital footprint through its own website and marketplaces. Your Company continued tofocus on increasing its reach in Tier 3-5 cities and added 75 (net) new Franchise Storestaking the overall tally to 300+ Franchise Stores covering 250+ towns. Your Company alsocontinues to focus on expansion of digital footprint through its own website Bata.in andother marketplaces like Amazon Myntra Flipkart Paytm Tata Cliq and Ajio. It has arobust e-commerce network that delivers to over 1100 cities and towns across the Country.
The Distribution Business and B2B Business of your Company continued to exhibitpromising growth with repeat orders and new customers. Bata Products are now available inabout 30000 MBOs.
Your Company continued upshift in marketing investments with new SurprisinglyBata Festive & Unlimited Sneakers at Bata campaigns which elevatedconnect with customers. Bollywood actor Ms. Disha Patani was onboarded as brand ambassadorto inspire Indian Youth with our new Sneaker Casual & Fashion collections. YourCompany also rolled out NEO casuals for NEO leaders under Hush Puppies thefirst ever marketing campaign focusing on Hush Puppies. Your Company continued to investin supply chain and is working on various initiatives to improve its agility andefficiency. Your Company now offers home delivery through its Omni-channel from allCompany-operated stores thereby increasing its Pan-India footprint. Your Company alsorevamped its entire CRM Platform which helped reducing bounce rate of customers and helpsbuilding their loyalty.
Your Company is also working on optimizing its retail network and cost-savings acrossrentals & operations manufacturing and drive efficiencies in its value chain. YourCompany continued to invest in I.T. modernization and upgradation of its operations andwarehouse management systems.
As a responsible corporate citizen and a trusted Brand your Company is committedtowards its social responsibilities through various initiatives details of which arecovered subsequently in this Report.
The Authorized Share Capital of your Company as on March 31 2022 stood at Rs. 700Million divided into 140000000 equity shares of Rs. 5/- each. The Issued Share Capitalof your Company is Rs. 642.85 Million divided into 128570000 equity shares of Rs. 5/-each and the Subscribed and Paid-up Share Capital is Rs. 642.64 Million divided into128527540 equity shares of Rs. 5/- each fully paid-up.
In line with the Dividend Distribution Policy of your Company your Board recommends aDividend of Rs. 54.5 (1090%) per equity share of Rs. 5/- each fully paid-up of yourCompany for the financial year ended March 31 2022 which includes onetime SpecialDividend of Rs. 50.5 (1010%) per equity share of Rs. 5/- each fully paid-up of yourCompany. The dividend if declared by the Members at the forthcoming Annual GeneralMeeting (AGM) shall be paid to the eligible Members from Tuesday August 23 2022 onwards.The total payout of aforesaid dividend amount would be approximately Rs. 7005 Million. Thesaid Dividend Distribution Policy has been uploaded on the website of the Company at www.bata.inunder the tab "Investor Relations > Company Policies" athttps://www.bata.in/company-policies.html and is available at the linkhttps://www.bata.in/on/demandware.static/-/Sites-bata-in-Library/default/vca1a6dc6c6c9dd1e1b2bd451ba8726ee06c054d7/Staticpagesimages/Company%20Policies/DividendDistributionPolicy-BIL.pdf Pursuant to the Finance Act 2020read with the Income-tax Act 1961 the dividend paid or distributed by a company shall betaxable in the hands of the shareholders w.e.f. April 1 2020. Accordingly in compliancewith the said provisions your Company shall make the payment of dividend after necessarydeduction of tax at source at the prescribed rates. For the prescribed rates for variouscategories the shareholders are requested to refer to the Finance Act 2020 andamendments thereof.
Your Company has not transferred any amount to the General Reserve during the financialyear ended March 31 2022.
ICRA Limited (ICRA) has reaffirmed the Credit Rating of [ICRA] AA+(pronounced as ICRA double A plus) for the Non-Fund Based facilities of your Company. Theoutlook on the Long-Term Rating is Stable. Further the disclosure as per Rule8(5) (xii) of the Companies (Accounts) Rules 2014 as amended is not applicable to yourCompany.
Your Company has no unclaimed / unpaid matured deposit or interest due thereon sinceDecember 31 2013. Your Company has not accepted any deposits covered under ChapterV - Acceptance of Deposits by Companies under the Act during the financial yearended March 31 2022.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
In terms of Section 186 of the Act and Rules framed thereunder details of the Loansgiven and Investments made by your Company have been disclosed in Note No. 5 of the Notesto Financial Statements for the financial year ended March 31 2022 which forms part ofthis Annual Report. Your Company has not given any guarantee or provided any securityduring the year under review.
RELATED PARTY TRANSACTIONS
During the financial year ended March 31 2022 all transactions with the RelatedParties as defined under the Act read with Rules framed thereunder were in the ordinarycourse of business and at arms length basis. Your Company does not have aMaterial Subsidiary as defined under Regulation 16(1)(c) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (as amended) (the "ListingRegulations").
During the year under review your Company did not enter into any Related PartyTransaction which requires prior approval of the Members of your Company. All RelatedParty Transactions entered into by your Company had prior approval of the Audit Committeeand the Board of Directors as required under the Listing Regulations. Subsequently theAudit Committee and the Board have also reviewed the Related Party Transactions on aquarterly basis. During the year under review there have been no materially significantRelated Party Transactions having potential conflict with the interest of your Company.
Since all Related Party Transactions entered into by your Company were in the ordinarycourse of business and also on an arms length basis therefore details required tobe provided in the prescribed Form AOC - 2 are not applicable to your Company. Necessarydisclosures required under the Ind AS 24 have been made in Note No. 35 of the Notes to theFinancial Statements for the financial year ended March 31 2022.
Investor Education and Protection Fund (IEPF)
In compliance with Sections 124 and 125 of the Act read with the Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 ("IEPFRules") as amended from time to time a sum of Rs.1997925/- has been deposited intothe specified bank account of the IEPF Government of India towards unclaimed / unpaiddividend amount for the financial year ended December 31 2013. As per the said Rules thecorresponding equity shares in respect of which Dividend remains unclaimed / unpaid forseven consecutive years or more are required to be transferred to the Demat Account ofthe IEPF Authority. During the year under review your Company has transferred 23572underlying Equity Shares to the Demat Account of the IEPF Authority in compliance withthe aforesaid Rules.
MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN END OF THEFINANCIAL YEAR AND THE DATE OF THIS REPORT
Except those disclosed in this Annual Report there are no material changes andcommitments affecting the financial position of your Company between the end of thefinancial year i.e. March 31 2022 and the date of this Report.
During the year under review no company became or ceased to be a subsidiary jointventure or associate of your Company. As on the date of this Report your Company has twowholly owned subsidiaries viz. Bata Properties Limited and Way Finders Brands Limited.
The Annual Reports of these Subsidiaries will be made available for inspection by anyMember of the Company at the Registered Office of your Company at 27B Camac Street 1stFloor Kolkata - 700016 West Bengal between 11:00 A.M. and 1:00 P.M. on any working dayupto the date of ensuing AGM. The Annual Reports of the aforesaid Subsidiaries for thefinancial year ended March 31 2022 shall be provided to any Member of your Company uponreceipt of written request. Members may also send an advance request at the e-mail id -email@example.com for an electronic inspection of the aforesaid documents. The AnnualReports along with the Audited Financial Statements of each of the Subsidiaries of yourCompany are also available on the website of your Company at www.bata.in Pursuant toSection 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules 2014 (asamended) a statement containing the salient features of Financial Statements of theaforesaid Subsidiaries has been provided in Form AOC-1 which forms part of this AnnualReport.
The Audited Consolidated Financial Statements (CFS) of your Company for the financialyear ended March 31 2022 prepared in compliance with Ind AS 27 issued by the Instituteof Chartered Accountants of India (ICAI) and notified by the Ministry of Corporate Affairs(MCA) Government of India also form part of this Annual Report.
Details of the Subsidiaries are given in the Annual Return in Form No. MGT - 7 as onMarch 31 2022. The Annual Return referred to in Section 92(3) of the Act is available onthe website of your Company at www.bata.in under the tab "Investor Relations >Annual Reports" under the link https://www.bata.in/annual-reports.html
AUDIT AND AUDITORS Statutory Auditors
In terms of Section 139 of the Act read with the Companies (Audit and Auditors) Rules2014 (as amended) M/s. B S R & Co. LLP Chartered Accountants (ICAI Firm RegistrationNo. 101248W/W-100022) ("BSR") was appointed as the Auditors of your Company fora consecutive period of 5 (five) years from conclusion of the 84th AGM held inthe year 2017 until conclusion of the ensuing AGM of your Company and accordingly willcomplete their present term on conclusion of the ensuing AGM. Your Board places on recordits appreciation for the services of BSR during their tenure as the Statutory Auditors ofyour Company. The reports given by the Auditors on the Standalone and ConsolidatedFinancial Statements of your Company for the financial year ended March 31 2022 formpart of this Annual Report and there is no qualification reservation adverse remark ordisclaimer given by the Auditors in their Reports. The Auditors of your Company have notreported any fraud in terms of the second proviso to Section 143(12) of the Act.
It is proposed to appoint M/s. Price Waterhouse Chartered Accountants LLP("PwCA") (ICAI Firm Registration No. 012754N/ N500016) Chartered Accountantsas Statutory Auditors for a period of 5 (five) consecutive years commencing from theconclusion of the 89th Annual General Meeting till the conclusion of the 94thAnnual General Meeting. PwCA is a member firm of the PricewaterhouseCoopers globalnetwork of firms referred to as PwC. It has a legacy of over 140 years inIndia and has over 15000 staff. PwCA have consented to the said appointment and haveconfirmed that their appointment if made would be within the limits laid down by orunder the authority of the Act. Further they have confirmed that they hold a validcertificate issued by the Peer Review Board of ICAI. The Audit Committee and the Board ofDirectors recommends the proposed appointment.
In terms of Section 204 of the Act read with Rule 9 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 (as amended) your Board at its meetingheld on February 8 2022 appointed Mr. Pawan Kumar Sarawagi (ICSI Membership No. FCS 3381and C. P. No. 4882) of M/s. P. Sarawagi & Associates Company Secretaries 27Brabourne Road Kolkata - 700001 as the Secretarial Auditors of your Company to conductthe Secretarial Audit for the financial year ended March 31 2022 and to submitSecretarial Audit Report.
The Secretarial Audit Report as received from M/s. P. Sarawagi & Associates in theprescribed Form No. MR - 3 is annexed to this Boards Report and marked as Annexure- I and does not contain any qualification reservation adverse remark or disclaimer.
CORPORATE GOVERNANCE REPORT
In compliance with Regulation 34 of the Listing Regulations read with Schedule Vthereto the Corporate Governance Report of your Company for the financial year endedMarch 31 2022 is annexed as Annexure - II and forms part of this Annual Report.
SIGNIFICANT AND MATERIAL LITIGATIONS / ORDERS
During the year under review there were no significant material orders passed by theRegulators / Courts and no litigation was outstanding as on March 31 2022 which wouldimpact the going concern status and future operations of your Company. The details oflitigation on tax matters are disclosed in the Auditors Report and FinancialStatements which form part of this Annual Report. During the year under review noCorporate Insolvency Resolution application was made or proceeding was initiated by /against Bata India Limited under the provisions of the Insolvency and Bankruptcy Code2016 (as amended). Further no application / proceeding by / against Bata India Limitedunder the provisions of the Insolvency and Bankruptcy Code 2016 (as amended) is pendingas on March 31 2022.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
In compliance with Section 134(3)(m) of the Act read with Rule 8 of the Companies(Accounts) Rules 2014 (as amended) a statement containing information on conservation ofenergy technology absorption foreign exchange earnings and outgo of your Company in theprescribed format is annexed to this Boards Report and marked as Annexure - III.
MANUFACTURING AND SOURCING
Your Company has an elaborate system-driven compliance programme in place inter aliafor thorough pre-review of the on-boarding procedure in case of a new manufacturingpartner in-sourcing and also for an associate manufacturer for our own factories. Thisincludes clearance of documents and a detailed compliance audit prior to approval. All ourfactories have been audited by SGS and have been certified as fully compliant by them. Ourvendors have also been audited by various competent organizations in order to check theirlevel of compliance. Your Company has engaged "Lexplosion" for providing supportand also ensuring not only all the statutory compliances but also progressive compliancesacross the organization. The software provides real-time data visibility and a compliancedashboard. Your factory has achieved benchmarks in the fields of Environment ManagementSystems (ISO 9001:2015) & Quality Management Systems (ISO 14001:2015). Multiple otherinitiatives are in progress across Occupational Health and Safety related aspects of yourCompanys operations at any given point of time.
Your Company was recognized by Winner Award (under Large Industry Category) under theZED stream in the CII National ZED Competition 2021 across industry for the Zero DefectZero Effect to manufacturing products & process which are eco-friendly. Our Productsmeet the optimal Quality Specifications and the systematic approach towards Zero Defect byimplementation of DMAIC process for continuous improvement and sustainable development.
To remain competitive your Company has also focused very strongly on innovation andhas successfully introduced "Life Natural" antimicrobial for School shoes(Tennis Naughty Boy Scout Ballerina and Hawaii Flip-Flop).
Under Sustainable initiatives your Company implemented 3R (PVC Rubber & EVALaminated Textile waste oil filtration & reuse along with reduction initiatives likeLED Motion Sensors efficient air compressors VFD/Servo motors Turbo ventilatorsintegrated APFC electrical panels) initiative of "Reduce Reuse & Recycle"program. Additionally we also have set-up Zero Discharge facilities Sewage TreatmentPlants & Rain-Water Harvesting in our plants.
Your Company has been working continuously with TBU (Tomas Bata University) based outof Zlin Czech Republic to improve properties of our rubber compound with better abrasionproperties. Apart from such initiatives your Company has also been using upcycled rubberfor rubber soles for sports shoes through its association with "Austin Rubber"based out of U.S.A. which makes the product not only performance driven but alsoeco-friendly.
Your Company continued its focus on capability and capacity development of indigenoussuppliers to reduce lead time and cost. Sourcing was taken nearer to the demand areas forsome products. We also created product range with shorter lead time. This resulted infaster replenishment in Stores and Speed-to-Market.
RESEARCH AND DEVELOPMENT ACTIVITIES AND ENERGY CONSERVATION
Research and Development activities during the year under review continued to emphasizeon creating a pollution-free and a safe work environment. Technological improvement inproduct development material development introduction of new footwear moulds processimprovement etc. were the key focus areas to improve quality of footwear andproductivity in manufacturing. During the year under review your Company developed NailPenetration Resistance Safety boot as per BIS norms IS 15298-Part 2: 2016.
An expenditure of Rs. 40.61 Million was incurred on Research and Development (includingproduct development initiatives) during the year under review as against Rs. 57.55Million during the financial year 2020-21. Research and Development Centres at BatanagarBataganj & Batashatak manufacturing units of your Company are approved by theDepartment of Science & Technology Government of India.
Your Company achieved reduction of emission at Batanagar Factory by reduction inBriquette Consumption by 7.5
Ton. Your Company shall continue to invest on Research and Development activities andenergy saving measures in its manufacturing units in the future as well.
Further information on conservation of energy and technology absorption are annexed tothis Report and marked as
Annexure - III.
CORPORATE SOCIAL RESPONSIBILITY
Your Company operates on the belief that an organization should exist to serve a socialpurpose and enhance the lives of people connected through its business. Your Company has aCSR Policy in place which aims to ensure that your Company continues to operate itsbusiness in an economically socially and environmentally sustainable manner whilerecognizing the interests of all its stakeholders. It takes up CSR programmes whichbenefit the communities in and around the vicinity of its operational presence resultingin enhancing the quality of lives of the people in those areas.
Your Company continued to demonstrate its social commitment to the communities in andaround which it operates. Our community interventions have been aligned with globalSustainable Development Goals (SDGs) primarily on good health & well-being qualityeducation reducing inequalities and leveraging partnerships for success.
Bata Childrens Program
During the year under review we continued to support children under our Global BataChildrens Programme (BCP) wherein we reached out to more than 4000 children. Thereare studies which reflect that the pandemic lead to long-term detrimental effects oneducation especially for underserved children mainly due to digital divide. BCP Programdealt with this situation by adopting a hybrid model for children across schools. Wepartnered to reach out to children through online and offline mode focusing on theiracademics sports (especially to keep them physically active as schools continued toremain closed) mental health & well-being conducting counselling sessions (to dealwith anxiety and depression due to the pandemic). We addressed the basic needs of thechildren through renovating classrooms setting up a dining space etc. to provide acordial environment for studies.
Stride with Pride
Our Stride with Pride program continued to reach out to the frontline Covid warriorsthrough shoe donation drives. We donated more than 64000 pairs of footwear to thefrontline heroes children in communities old age homes etc. across 10 cities. Wereceived recognition from various Government institutions and hospitals.
Under the Covid-19 community interventions we supported the overburdened medicalfacilities and government departments with more than 30000 Covid Care Kits OxygenConcentrators Masks PPE Kits etc. We also sensitized BCP children on Covid appropriatebehavior for school readiness and supported 100 out-of-school children with nutritiousmeals. We also collaborated with the Government Medical Dept of Gurugram and supportedthem with a 20 bedded temporary Covid Care Centre.
Girl Child Support
Bata supported 500 girls for their continued education through distribution of TabletsEducation kits and involving them in extracurricular activities.
Our employees have been our pillar of strength across all the social initiatives.During the pandemic employees reached out to frontline workers and communities at largeto conduct COVID support donation drives and footwear donation. With schools closed ouremployees were provided opportunities to engage with the children virtually on specialoccasions like World Health Day Earth Day Childrens Day Christmas etc. Ouremployees also participated in the winter donation drive through Goonj and a specialvirtual volunteering program with Goodera wherein they recorded audio books for thevisually challenged children. With re-opening of schools we are gradually going back tophysical volunteering sessions across BCP schools. Your Company made significant stridesto harness all its resources towards successful execution of the CSR projects across alllocations.
Details of composition of CSR Committee and other relevant details have been providedin the Corporate Governance Report. The Annual Report on CSR activities containingdetails of CSR projects amount spent etc. is appended as Annexure - IV to thisReport.
The salient features of the CSR Policy of your Company is appended as Annexure - Vto this Report and the complete policy has been uploaded on the website of your Company atwww.bata.in under the tab "Investor Relations > Company Policies" athttps://www.bata.in/company-policies.html and is available at the linkhttps://www.bata.in/on/demandware.static/-/Sites-bata-in-Library/default/vca1a6dc6c6c9dd1e1b2bd451ba8726ee06c054d7/Staticpagesimages/Company%20Policies/CSR-Policy-Bata-India-Ltd-2021.pdfThere has been no change in the CSR Policy during the year under review.
SUPPORT FROM BATA SHOE ORGANIZATION
Your Company continues to receive support from the Holding Company - Bata (BN) B.V.Amsterdam The Netherlands and also from Bata Shoe Organization (BSO). Your Company alsoenjoys the benefits of technical research through Global Footwear Services Pte. Ltd.Singapore (GFS). Your Company has renewed the Technical Collaboration Agreement with GFSwith effect from January 1 2021 for a period of ten years. In terms of the saidAgreement your Company receives guidance training of personnel and services from GFS inconnection with research & development marketing brand development footweartechnology testing & quality control store location layout & designenvironment health & safety risk & insurance management etc. Your Companycontinues to obtain expertise and experience from the personnel of GFS and other BSO groupCompanies to improve its product range and operational processes throughout the year. Interms of the said Agreement your Company has paid technical services fee of Rs. 245.48Million to GFS for the financial year ended March 31 2022 which is around 1% of theTurnover of your Company.
BOARD OF DIRECTORS BOARD MEETINGS AND KEY MANAGERIAL PERSONNEL Composition
Your Companys Board is duly constituted and is in compliance with therequirements of the Act the Listing Regulations and provisions of the Articles ofAssociation of your Company. Your Board has been constituted with requisite diversitywisdom expertise and experience commensurate to the scale of operations of your Company.
During the year under review a total of 5 (five) Meetings of the Board of Directors ofyour Company were held i.e. on May 14 2021 June 9 2021 August 11 2021 November 32021 and February 8 2022. Details of Board composition and Board Meetings held during thefinancial year 2021-22 have been provided in the Corporate Governance Report which formspart of this Annual Report.
Changes in Board Composition
Details of changes in the Board Composition during the year under review are as under:
|Sl. No. Name of the Directors ||Designation & Category ||Reasons and date of appointment / re-appointment |
|1. Mr. Gunjan Shah (DIN: 08525366) ||Managing Director and Chief Executive Officer (Executive) ||Appointed as a Whole-time Director (Additional Director)w.e.f. June 21 2021 and further appointed as Whole-time Director liable to retire by rotation at the 88th AGM held on August 12 2021. |
| || ||Appointed as the Managing Director w.e.f. October 1 2021 subject to approval of the Members of the Company. |
|2. Ms. Vidhya Srinivasan (DIN: 06900413) ||Director Finance and CFO (Executive) ||Appointed as a Whole-time Director liable to retire by rotation at the 88th AGM held on August 12 2021. |
|3. Ms. Radha Rajappa (DIN: 08530439) ||Independent Director (Non-Executive) ||Appointed as an Independent Director at the 88th AGM held on August 12 2021. |
|4. Ms. Kanchan Chehal (DIN: 09263584) ||Director HR and CHRO (Executive) ||Appointed as Whole-time Director (Additional Director) w.e.f. August 16 2021 subject to approval of the Members of the Company. |
|5. Mr. Alberto Toni (DIN: 08358691) ||Non-Executive Director ||Retired by rotation and re-appointed pursuant to Section 152(6) of the Act at the 88th AGM held on August 12 2021. |
With effect from end of business hours on September 30 2021 Mr. Rajeev Gopalakrishnan(DIN: 03438046) completed his tenure as the Managing Director of your Company and alsoceased to be a Director as he relinquished his position to focus on his role as President Asia-Pacific market at Bata Global Group Level.
With effect from end of business hours on August 12 2021 Mr. Sandeep Kataria (DIN:05183714) who was the Whole-time Director and CEO of your Company relinquished thepositions held by him to focus on his other responsibilities in Bata at Global Level.
With effect from end of business hours on June 30 2021 Mr. Ram Kumar Gupta (DIN:01125065) retired from his services as Director Finance and CFO of your Company.
With effect from end of business hours on March 31 2021 Ms. Anjali Bansal (DIN:00207746) ceased to be an Independent Director of the Company. The Board places on recordits appreciation for their services.
Other details pertaining to the Directors their appointment / cessation during theyear under review and their remuneration are given in the Corporate Governance Reportannexed hereto and forming part of this Report.
Directors seeking appointment / re-appointment
Mr. Shaibal Sinha (DIN: 00082504) Non-Executive Non-Independent Director of yourCompany is liable to retire by rotation at the ensuing AGM and being eligible hasoffered himself for re-appointment. Your Board recommends his re-appointment as a Director(Non-Executive Non-Independent) of your Company liable to retire by rotation.
Following directors also seek appointment at the ensuing AGM and their appointments arerecommended by the Board:
- Mr. Gunjan Shah as the Managing Director and CEO.
- Ms. Kanchan Chehal as Director HR and CHRO (in respect of whom Notices under Section160 have been received by your Company). Necessary Resolution(s) alongwith disclosure(s) /further information(s) in respect of the aforesaid directors seeking appointment /re-appointment at the ensuing AGM have been given in the Notice convening the 89thAGM of your Company.
Key Managerial Personnel
As on the date of this Report Mr. Gunjan Shah (DIN: 08525366) Managing Director andChief Executive Officer who was appointed during the year under review Ms. VidhyaSrinivasan (DIN: 06900413) Director Finance and Chief Financial Officer and Mr. NitinBagaria (ACS-20228) Company Secretary & Compliance Officer are the Key ManagerialPersonnel (KMP) of your Company. During the year under review Mr. Rajeev GopalakrishnanMr. Sandeep Kataria and Mr. R. K. Gupta ceased to be KMPs details of which are givenabove.
Declaration by Independent Directors
The Independent Directors of your Company have submitted requisite declarations thatthey continue to meet the criteria of Independence as laid down in Section 149(6) of theAct and Regulations 16(1)(b) and 25(8) of the Listing Regulations and as amended by SEBI(Listing Regulations and Disclosure Requirements) (Third Amendment) Regulations 2021 andthere is no change in the status of their Independence and have confirmed that they arenot aware of any circumstance or situation which exists or may be reasonably anticipatedthat could impair or impact their ability to discharge their duties. In terms of Section150 of the Act and rules framed thereunder the above Directors have registered themselveswith the Indian Institute of Corporate Affairs (IICA) and they are exempted from appearingfor the online proficiency self-assessment test. Furthermore they have also renewed theirregistration with IICA for applicable tenures. Ms. Radha Rajappa who was appointed as anIndependent Director w.e.f. June 9 2021 has complied with the requirements of Rule 6(4)of the Companies (Appointment and Qualifications of Directors) Rules 2014 (as amended)within the prescribed time. The Board of Directors further confirms that the IndependentDirectors also meet the criteria of expertise experience integrity and proficiency interms of Rule 8 of the Companies (Accounts) Rules 2014 (as amended).
Committees of the Board
Pursuant to various requirements under the Act and the Listing Regulations the Boardof Directors has constituted various committees such as Audit Committee Nomination andRemuneration Committee Stakeholders Relationship Committee Risk & ComplianceManagement Committee and Corporate Social Responsibility Committee. The details ofcomposition terms of reference etc. pertaining to these committees are mentioned in theCorporate Governance Report which forms part of this Annual Report.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the year under review your Company has duly complied with the applicableprovisions of the Revised Secretarial Standards on Meetings of the Board of Directors(SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India(ICSI).
The Board of Directors of your Company has duly constituted an Audit Committee incompliance with the provisions of Section 177 of the Act the Rules framed thereunder readwith Regulation 18 of the Listing Regulations. The recommendations made by the AuditCommittee are accepted by your Board. Name of the Audit Committee members number ofmeetings held during the year under review terms of reference and other requisite detailshave been provided in the Corporate Governance Report which forms part of this AnnualReport.
NOMINATION AND REMUNERATION POLICY
Your Board has adopted a Remuneration Policy for identification selection andappointment of Directors Key Managerial Personnel (KMPs) and Senior Management Personnel(SMPs) of your Company. The Policy provides criteria for fixing remuneration of theDirectors KMPs SMPs as well as other employees of your Company. The Policy enumeratesthe powers roles and responsibilities of the Nomination and Remuneration Committee. Therehas been no change in the said Policy during the year under review.
Your Board on the recommendations of the Nomination and Remuneration Committeeappoints Director(s) of your Company based on his / her eligibility experience andqualifications and such appointment is approved by the Members of the Company at GeneralMeetings. The Policy also provides for Board Diversity criteria. The salient features ofthe said Policy is appended as Annexure VI and the complete Policy has beenuploaded on the website of your Company at www.bata.in under the tab "InvestorRelations > Company Policies" at https://www.bata. in/company-policies.html and isavailable at the link https://www.bata.in/on/demandware.static/-/Sites-bata-in-Library/default/vca1a6dc6c6c9dd1e1b2bd451ba8726ee06c054d7/Staticpagesimages/Company%20Policies/Nomination-and-Remuneration-Policy-Revised-2021.pdfYour Company conducts a Board Evaluation process for the Board of Directors as a wholeBoard Committees and also for the Directors individually through self-assessment and peerassessment. The details of Board Evaluation process for the financial year 2021-22 havebeen provided in the Corporate Governance Report which forms part of this Annual Report.
DISCLOSURES ON REMUNERATION OF DIRECTORS AND EMPLOYEES OF THE COMPANY
Details as required under Section 197(12) of the Act read with Rules 5(1) 5(2) and5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014(as amended) are annexed to this Boards Report and marked as Annexures - VIIand VIII. Further the Non-Executive Non-Independent Directors of your Company donot accept any sitting fees / commission.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Act the Directors to the best of their knowledge andbelief hereby confirm that:
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed;
(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at March 31 2022 and of the profit of theCompany for that period;
(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively; and
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
In terms of Section 177 of the Act and Rules framed thereunder read with Regulation 22of the Listing Regulations your Company has a Whistle Blower Policy / Vigil Mechanism inplace for the Directors and Employees of your Company through which genuine concernsregarding various issues relating to inappropriate functioning of the organization can beraised. A Vigil Mechanism Committee under the Chairmanship of the Audit Committee Chairmanis also in place. The Whistle Blower Policy has been uploaded on the website of yourCompany at www.bata.in under the tab "Investor Relations > CompanyPolicies" at https://www.bata.in/company-policies.html and is available at the linkhttps://www.bata.in/on/demandware.static/-/Sites-bata-in-Library/default/vca1a6dc6c6c9dd1e1b2bd451ba8726ee06c054d7/Staticpagesimages/Company%20Policies/Whistle-Blower-Policy.pdf The Policy provides access to the Legal Head of your Company andto the Chairman of the Audit Committee. No person has been denied an opportunity to haveaccess to the Vigil Mechanism Committee and the Audit Committee Chairman.
CONFIRMATION OF COMPLIANCE ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
Your Company is committed to provide a safe and secure environment to its womenemployees across its functions and other women stakeholders as they are considered asintegral and important part of the organization.
In terms of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 (as amended) and Rules framed thereunder your Company has dulyadopted a Policy and has also complied with the provisions relating to the constitution ofInternal Complaints Committee (ICC). A summary of the complaints dealt during thefinancial year ended March 31 2022 in terms of the said Act and Rules framed thereunderhas been provided in the Corporate Governance Report which forms part of this AnnualReport.
Your Company has been conducting awareness campaign across all its manufacturing unitswarehouses retail stores and office premises to encourage its employees to be moreresponsible and alert while discharging their duties.
RISK MANAGEMENT AND ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Your Companys internal financial controls ensure that all assets of your Companyare properly safeguarded and protected proper prevention and detection of frauds anderrors and all transactions are authorized recorded and reported appropriately. YourCompany operates through definitive Chart of Authorities (COAs) and Standard OperatingProcedures (SOPs) in respect of its operations including financial transactions. Such COAsand SOPs are regularly monitored and if required modified from time to time depending onbusiness requirements.
Your Company has an adequate system of internal financial controls commensurate withits size and scale of operations procedures and policies ensuring orderly and efficientconduct of its business including adherence to the Companys policies safeguardingof its assets prevention and detection of frauds and errors accuracy and completeness ofaccounting records and timely preparation of reliable financial information.
Such practice provides reasonable assurance that transactions are recorded as necessaryto permit preparation of Financial Statements in accordance with the applicablelegislations and that the same are well within the COAs and SOPs without exception. YourCompany also monitors through its Internal Audit Team the requirements of processes inorder to prevent or timely detect unauthorized acquisition use or disposition of theCompanys Assets which could have a material effect on the Financial Statements ofthe Company. The Internal Audit function is responsible to assist the Audit Committee andRisk & Compliance Management Committee (RCM Committee) on an independent basis with acomplete review of the risk assessments and associated management action plans. RiskManagement is embedded in the Companys operating framework. Your Company believesthat risk resilience is key to achieving higher growth. To this effect there is a robustprocess in place to identify key risks across the Company and prioritize relevant actionplans to mitigate these risks. Risk Management framework is reviewed periodically whichincludes discussing the management submissions on risks prioritising key risks andapproving action plans to mitigate such risks. An assessment of cyber security has alsobeen carried out in compliance with the requirement of the Listing Regulations and amitigation plan has been made to counter such risks. The Internal Audit Report and RiskInventory Report are reviewed periodically by the Audit Committee and the RCM Committeerespectively. The Chief Internal Auditor is a permanent invitee to the Audit CommitteeMeetings and a member of the RCM Committee. The Audit Committee advises on various riskmitigation exercises on a regular basis. Your Company has been maintaining a separateInternal Audit Team headed by the Chief Internal Auditor appointed by the Audit Committeeof your Board.
Further details pertaining to the RCM Committee and Meetings held during the year underreview are given in the Corporate Governance Report. Your Board is of the opinion that theInternal Financial Controls affecting the Financial Statements of your Company areadequate and are operating effectively.
NON-APPLICABILITY OF MAINTENANCE OF COST RECORDS
The Central Government has not prescribed the maintenance of cost records under Section148(1) of the Act and Rules framed thereunder with respect to the Companys nature ofbusiness.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT Industry structure and developments
The Global footwear market valued at over USD 220 Billion is currently driven byrising demand for fashionable trendy yet functional and comfortable footwear. Economistsexpect the market to grow at a CAGR of 4% in the next five years with fashionable footwearcontributing more than 25%. Increasing penetration of smart phones and internetconnectivity is further propelling footwear sales.
India is poised to become a favourable market for fashion retailers given the followinggrowth drivers:
1. Massive population of middle-class consumers with rising income and purchasing power
2. Increasing economic empowerment for women
3. Change in consumer mindset including brand consciousness
4. Easy availability of consumer credit
5. Increase in choices of quality products
The Indian footwear industry witnessed increased activity with the changing consumerattitude towards footwear. Shoes initially positioned as a value purchase weretranscending into a lifestyle purchase. It is however still under-penetrated with percapita consumption of around 1.7 pairs per annum as compared to the global average ofaround 3 pairs. Given the combined effect of outlet closures shutdown of schoolscolleges etc. preference for Work-from-Home and shift in consumer behavior towardsdiscretionary spending the Indian footwear industry was one of the seriously hitbusinesses by the Covid-19 pandemic.
Powered by a massive vaccination drive the consumer sentiment revived swiftly from thepandemic shock since then the footwear market in India is witnessing a continuous uptickand is well positioned to grow in double digits over the next few years backed by ourGovernments Make in India drive.
Opportunities and Threats
Indian Retail Industry has emerged as one of the fastest growing industries accountingfor over 10% of the Countrys GDP and is projected to grow at a pace of 9%. Althoughit was one of the worst hit industries by the Covid-19 pandemic it has shown promisingsigns of recovery. Retail is now growing significantly in the commercial real estatemarket.
India is the second largest footwear producer and one of the top exporters in theworld contributing significantly to the export earnings and employment generation in theCountry. It is also one of the highest employment creating sectors in the Country. On theconsumption side the Country has become a focal point for the fashion and lifestylebusinesses over the years owing to rapidly increasing disposable income.
The pandemic momentarily altered the consumer sentiments towards discretionary spendingbut also created pockets of momentum and opportunities for example online sales andspike in demand for casual and sports shoes. A greater proportion of the overall Indianpopulation which includes Tier 3-5 cities now have considerably higher spending poweras a result of which expansion of the footwear market has resumed. Suppressed demandalong with better economic outlook are further expected to boost consumer sentiments anddrive-up discretionary spending.
However factors like rate of economic growth inflation regulatory and taxationchanges unemployment trends etc. continue to affect the growth trajectory of the Indianfootwear market which otherwise possess handsome growth potential for various reasonsincluding liberal policies advancement in technologies innovation availability ofmanpower growth of e-commerce increasing urbanization etc. E-commerce is the fastestgrowing channel in India and is expected to reach USD 350 Billion by 2030. TheGovernments focus to improve digital infrastructure in Tier 2 and Tier 3 marketswould be favourable to the sector.
To accelerate growth your Company is taking multiple initiatives under the key thrustlevers - Driving Portfolio Evolution Accelerating Expansion via Franchise &Distribution Marketing Investments Exploding Digital Footprint Agile & EfficientSupply Chain Staying nimble on costs with Talent Process Technology investments at thecore.
Your Company is also working aggressively on increasing its reach to customers in Tier3-5 cities. Due to strong Brand recall your Company has been witnessing increasinginterest for opening of franchise stores. Your Company also has opportunities in theI&D business as Bata is the only player which is present across categories and pricepoints. However the competition continues to grow with unorganized sector moving intoorganized space. The free cash from operations and operating leverage allows financialflexibility to your Company to grow its business organically and/or inorganically as peropportunities available.
Innovation via agile product creation scaling up digital channels expansion in Tier3-5 cities through opening of franchise stores and productivity enhancement will continueto be the priority of your Company along with investments in our brands and stores.
Key Focus Areas
Marketing and Campaigns
After several disruptions due to the pandemic since March 2020 the last financial yearbegan with the hope of strong recovery. However with the resurgence of the infections inthe first quarter of the financial year under review a mild but virulent third wave inthe fourth quarter of the financial year under review complicated the growth trajectory.During both waves while restrictions were in place Bata India stood strong with itspromise of resilience to step ahead. During the pandemic Casualization andSneakerization emerged as dominant trends. Customers opted for comfortablecasual footwear for their out-of-home needs which included office as well as everydaywear. We leveraged this evolving trend and reached out to our customers who had to resumeoffice through the campaign "Relaxed Work Wear" with our new celebrityambassador Mr. Kartik Aaryan. The Campaign targeted the inherent need of having greatcomfort with casual looking styles that can be worn to formal workwear occasions. Towardsthe end of the year with the pandemic becoming less severe customers were looking to stepout of their homes to relive the joys of pre-pandemic world. Hence our festive seasoncampaign aimed on this insight with "Step Ahead" messaging encouraging them tomove out to enjoy festivities. While Sneakers emerged as the dominant category especiallyamongst the Gen Z and millennials getting a large variety to choose from under one roofcontinues to be a challenge. Accordingly your Company launched a vibrant and groovycampaign Unlimited Sneakers at Bata which put forth our proposition of 300+sneaker styles from 9 brands. At the same time to bring the proposition alive inside thestores we piloted physical Sneaker Studios Single wall with all sneaker stylesdisplayed on it across various Bata Stores. This Sneaker Studio concept was widelyaccepted and was rolled out to over 100 Bata and Franchise stores in the fourth quarter.Women shoppers now seek styles that are versatile enough to take them through multipleoccasions in a day. Multifunctional footwear has become more relevant for women today andBata introduced footwear that merged active and leisurewear attributes. The 24x7 CasualCollection was curated keeping in mind the various roles that women play throughout theday for which they need versatile casual shoes to effortlessly move from one occasion toanother. It features Bata Bata Red Label Bata Comfit and Naturalizer brands withartisanal styled heels wedges & trendy sneakers with hues of colors that can bematched with any occasion anytime anywhere. The new campaign features Batas newbrand ambassador Ms. Disha Patani to attract younger audiences who seek outdoors-inspiredbenefits while still wanting a fashion-driven aesthetic that works well for the citylife.
For the corporate segment Hush Puppies is always known as a quintessential premiumfootwear brand. However it is now more multifaceted in terms of its offering and not justlimited to formal footwear. Hush Puppiess Neo Casual collection for Neo Leadersoffers smart casual and semi casual range of footwear that can easily be worn fromboardroom to a party. The launch campaign of Hush Puppies Neo Casual collectionshowcases these new emerging dressing trends for neo age leaders. Our marketing effortswere recognized by the industry through various awards like Readers Digest IndiasMost Trusted Brand Images Most Admired Retailer Customer Fest Leadership Award forContactless Service Maddies Silver for Most Effective Retail Campaign IPRCCA Gold forBest Influencer Marketing Campaign & IAMAI Bronze for Interactive Online Marketing.
Innovation - Products
During the year under review based on the consumer buying behavior we focused onfootwear that merged active and leisurewear attributes therefore - NorthStar & PowerSneakers have held the top spot across new products taking the Innovation Rate to itshighest ever - 27.2%.
Further accelerated by changes in consumer behaviour comfortable shoes that can beworn both at home and at office saw the return of casual shoes and mademulti-functionality the key. We incorporated various comfort features into our Red Labelcasual shoes and brought a fine balance between comfort and the desire to feel smart.
In terms of colours and materials fresh additions were made to the longstandingneutrals palette to include hues of metallic shine and summer sparkle alongsidecomfort-first footwear and artisanal-style craftwork.
We continue to emphasize cloud-like cushioning and technologies like Cushion SoftOrtholite & Life Natural antibacterial across our footwear.
Customer Care Initiatives
During the year under review the focus was primarily to pivot the Customer Servicesand align the same with NPS feedback inputs and improve Omni-channel experience. NPS as afeedback for loyalty channel was re-launched for all offline and online channels that Bataservices. This also involved re-defining consumer journeys and identifying pain points.Multiple new initiatives were rolled out improved social media engagements andquicker complaint resolution mapping multiple integration to automate Customer Serviceoperations implementation of refund automation solutions improving order failure issuesand onboarding new ORM tool with better tech solutions.
Keeping in mind the changes in the overall business environment Bata Club strategy hadto be rejigged. Accordingly we realigned our focus on scaling up our Omni-channelstrategy profile enrichment drive and email campaigns to increase awareness and drivetraffic to bata.in. We also invested heavily on machine learning & AI science tocreate life cycle segmentation propensity modelling and more optimized one-to-onecommunication for "Right customer at Right time". Dedicated campaigncommunication aimed at different life cycle segments like New Grow Stable Decline andlapsed have helped driven customer back to stores for repeat purchase and increasing theactive user base annually.
In recently concluded 15th edition of Customer Fest an event that celebrates adoptionof CRM CX & data science programs and practices in brands across all industry sectorsin India Bata won the most prestigious category "Champion of Champions Loyalty Program of the Year 2022".
Segment wise or product wise performance
Your Company operates in Footwear & Accessories Segment only and performances ofmajor business categories and key brands of your Company during the financial year endedMarch 31 2022 are highlighted below:
India Inc. experienced a roller coaster ride during the year under review as itexperienced the devastating subsequent waves of the Covid-19 infections. This impacted theregular and consistent working of our stores factories and offices which were closed inchequered manner depending on the severity of the infections in various parts of theCountry. Your Company learned to live with these starts and stops of the business drawingheavily from its ethos and values. Our teams on ground displayed tremendous agilityingenuity grit and resilience which helped us chart out the road for normalization inthese trying times. Your Company went through a phased strategy of survive reviverevitalize & thrive in financial year under review to face the challenges of thecontinuing pandemic and come out of it.
We continued our program of conducting extensive training for our store teams on adetailed 27-point safety SOP for our store opening and running. Our store teams workedrelentlessly to ensure Bata stores were following all the safety protocols and localguidelines while ensuring minimal impact on our store operations. We continued our workwith the local communities while extended helping hand to our store teams as well.
We increased digitalization of our internal communication channel & conductedmultiple calls & townhalls to keep the teams on ground motivated & connectedduring lockdown & post lockdown period & also scaled up I Grow adigital learning platform for retail team which had over 2 lac hours of learning.
We continued our focus on controlling our costs related to retail store expenses andgenerated millions of savings by negotiating rents across 1000+ stores.
Your Company continued to develop new business channels in line with changing consumerbehavior. For Digital Adopters and Digital Novices we rolled out innovative solutionslike Bata ChatShop - WhatsApp shopping Bata Store on Wheels and Bata Home Deliverywhich enabled easier & safe shopping experience for our customers even as thepandemics 2nd and 3rd waves raged on. The sales thoughdigitally enabled channels continued to grow in the last one year. Today 60% ofmarketplaces orders are delivered via our stores powered by Omni-channel technologies.
Your Company enabled multiple tech initiatives at the store level such as Contact-lesspayments Find a Pair Find my size QR code scanning Bata Loyalty Program store updateson Google etc. which improved the overall customer experience and safety.
We have continued our expansion in Tier 3 to 5 cities via the franchisee model. Theyear saw good traction not only in store openings for this channel but a sustained Likefor Like growth as well. We opened a total of 75 (net) franchise stores this year takingthe total to 300+ franchise stores in the Country. We have also made deeper forays intothe Departmental Stores like Shoppers Stop Lifestyle and Central with Shop inShops (SIS). We have had good success in the above-mentioned SIS selling morepremium products in over 230 SIS.
Digital Multi-Channel Business
E-commerce business continued its steady growth path during the year under review. Wesold more than 2.8 Million pairs of footwear through online channels and achieved aturnover of Rs.1601 Million. Bata.in underwent a platform change from Octashop toSalesforce Commerce Cloud with enhanced UI/UX to create customer delight in its purchasejourney on our website. Endless Aisle that connected retail store inventory to onlinewebsite with technical integration has opened the complete Bata product catalogue to theshoppers. Bata India shipped 100% of orders received from Bata.in through its stores.Marketplace business on Amazon Flipkart Myntra Tata Cliq etc. saw a significant growthas well. We opened a dedicated warehouse facility managed by third party to furtherservice our Marketplace orders.
In addition Home Delivery Services offered in over 1200 stores allowed store staff toplace orders on customers behalf if the article of their choice was not available inthe store and retain customers who otherwise would have walked out of our stores due tonon-availability of size and color. This service contributed about 5% of Retail storesrevenue and sold over 1 Million pairs.
B2B business has been steady on Amazon and Flipkart with sharp focus on growthopportunities across categories and brands. Focus has been on improving secondary sales onthese platforms which in turn improves primary business. Rigorous marketing campaignsincluding Cost per Click (CPC) and Cost per Million Impressions (CPM) were launched whilediligently participating in brand specific and category specific events for increasedBrand visibility. Tech integrations like Return and Exchange Functionality improvedcustomer experience on Bata.in thus reducing customer complaints. Your Company has alsofocused on Technology upgradation to make internal processes robust and strengthen theserviceability.
In Hush Puppies we continued our approach of communicating about technology withintroduction of new product technologies like Bounce Max Bounce and Bounce Plus. Withchanging consumer trends Hush Puppies has been increasing its focus on casual shoes. Weintroduced a large variety of casual shoes in a vibrant range of colors. The collection isa perfect addition to wardrobe with a variety of styles that can be paired up for modernwork attires to on-the-go ensembles to trendy weekend looks.
The new range for men and women comes with smart sneakers pumps and ballerinas insmooth-grain leather knitted fabrics and soft colorful suede for men and women. Thecollection boasts of athletic-inspired comfort combined with elevated tailored stylingthat allows for more wearing occasions than an average shoe choice.
The Hush Puppies store network has driven consumer satisfaction and Like for Likesales much ahead of the competition this year.
American shoe brand Naturalizer has been a pioneer in designing shoes specificallysuited to the contours of womens feet since 1927. After successfully launching itsexclusive stores in multiple international cities like New York Chicago Toronto &Dubai Naturalizer has launched its flagship store in India at Mall of India Noida. Ourfurther expansion of EBOs took a pause given the pandemic situation. Designed in NewYork and adorned by working women the shoe with the beautiful fit has beenretailing exclusively in India at 50 Bata stores across 4 cities for almost a decade.
Our Concept stores in India have been launched basis the New York 5th Avenue store ofthe brand carefully cultivated to reflect brands heritage while incorporatingmodern elements to offer the ultimate brand experience designed specifically withcustomers in mind. The objective behind this store launch is to reach the loyal customerbase while creating the ultimate destination for discovery through a strong retailshowcase and experiential marketing.
The Naturalizer collection serves well to the modern-day women for all day comfort asthe patented N5 comfort technology with unmatched ease. The collection flaunts countlessstyles ranging from pumps mules chunky soles and heels. The brands designphilosophy resonates with modern aesthetics combined with textures from their own archivesand finds ways to incorporate them in the new collections.
Your Companys non-retail business division comprises of Multi-Brand Outlets KeyAccounts industrial and institutional business divisions and exports. With the change inconsumer behavior as well as Trade Dynamics we have made changes to provide betterservice to our Trade Partners and Consumers. We continued to focus on select categoriesand casualization. Overall health of the business has improved in last 3 quarters inspiteof the pandemic. Bata availability in MBO is now in 1000+ towns and about 550 enterprisesprovide Bata shoes to their Employee/Customers through our B2B Division.
The current economic state inflation challenging retail environment and new waves ofpandemic pose threats to businesses across all sectors. However Footwear market is seeinga bounce back in occasion-based purchases office wear and school wear. Your Companycontinues to keep its pace with its customers and evolve in every aspect including stylesfootwear segments and comfortable yet stylish portfolio. Customer aspirations are evolvingand people in smaller towns expect the same experiences as those in Metros. Accordinglyyour Company is expanding its footprint across the Country. Your Company is also workingon the brand appeal amongst millennials and Gen Z. Your Company is strategicallypositioned to harness the present challenges given the strength of its Brand innovationcapabilities retail foothold and growing online presence in footwear and accessoriescategory.
With regard to online sales your Company expects to see its digital sales outpaceoverall growth and plans to have a robust approach whether it is through D2C channelE-commerce platforms or Omni-channel approaches which are a big hit amongst thecustomers.
Risks and Concerns and Contingent Liabilities
Your Company acknowledges the fact that competition from both domestic andinternational players is increasing every passing day. In addition to increasingcompetition Covid has changed customers needs behaviour and buying habits andsubsequent covid waves even localized may impact customer experience and businessoperations. Your Company acknowledges that continuous changes will have to be made in theproduct portfolio mix so that Bata brand will not lose relevance to the millennials andthe increasing youth population of India. Your Company also realizes that modernization ofI.T. systems along with having suitable protection from risk of loss / theft of data /other vulnerabilities is one of the major areas of concern globally. Your Company monitorsits major risks and concerns at regular intervals. Appropriate steps are taken inconsultation with all concerned including the RCM Committee and the Audit Committee of theBoard to identify and mitigate such risks.
During the normal course of its business operations your Company has been subjected tolitigations in connection with or incidental thereto. These litigations include civilcases excise and customs related cases etc. filed by and against the Company. Thesecases are being pursued with due importance and in consultation with legal experts inrespective areas. Your Board believes that the outcome of these cases is unlikely to causea materially adverse effect on the Companys profitability or business performance.Your Company has a Contingent Liability of Rs. 828.37 Million as on March 31 2022 ascompared to Rs. 411.65 Million as on March 31 2021. Attention is drawn to theexplanations mentioned in Note No. 30 of the Notes to Financial Statements for thefinancial year ended March 31 2022. In view of the present status and based on legaladvice obtained from time to time your Board is of the opinion that no provision isrequired to be made against these Contingent Liabilities.
Internal control systems and their adequacy
A separate paragraph on internal control systems and their adequacy has been providedelsewhere in the Boards Report.
Discussion on financial performance
The operations and consequential financial performance of the Company remained impactedduring the year under review due to the Covid-19 pandemic.
The Earnings per Share (EPS-Basic and Diluted) of your Company for the financial yearended March 31 2022 was at Rs. 7.85 as compared to the (EPS-Basic and Diluted) for theprevious financial year ended March 31 2021 at Rs. (7.02). Your Company recorded anEBITDA margin of 17.41% during the financial year under review as compared to 9.17% duringthe financial year 2020-21. Your Company does not have any Bank Borrowings and the entirecapital expenditure has been funded through internal sources.
The Capital Expenditure incurred during the year under review amounted to Rs. 491.73Million as compared to Rs. 343.18 Million in the previous year.
Details of significant changes in key financial ratios alongwith explanation
In compliance with the requirement of the Listing Regulations the key financial ratiosof the Company alongwith explanation for significant changes (i.e. for change of 25% ormore as compared to the immediately previous financial year will be termed assignificant changes) has been provided hereunder:
|Sl. No. Particulars ||2021-22 ||2020-21 |
|(i) Debtors to Sales (in days) ||11 ||17 |
|(ii) Inventory to Turnover Ratio (in months) ||2.74 ||2.81 |
|(iii) Interest Coverage Ratio ||1.87 ||(0.70) |
|(iv) Current ratio ||2.44 ||2.61 |
|(v) Debt Equity Ratio* ||0.60 ||0.59 |
|(vi) Operating Profit Margin (%) ||7.28 ||(4.25) |
|(vii) Net Profit Margin (%) ||4.23 ||(5.29) |
|(viii) Return on Net worth (%) ||5.56 ||(5.13) |
* There is no borrowing in the Company. However Finance cost includes interestexpenses accounted for various deposits in accordance with Ind AS 109 FinancialInstruments and interest expense accounted on various lease contracts in accordance withInd AS 116 Leases has been considered as debts.
The significant changes over previous year across all ratios is due to higher salesfaster realisations and stores re-openings post lifting of lockdowns restrictions. Fordetailed explanation please refer to Note no. 39 of the Notes to Standalone FinancialStatements for the financial year ended March 31 2022.
The other financial ratios of the Company relating to previous 10 years has beenprovided in other part of Annual Report 2021-22.
Material developments in human resource / industrial relations front including numberof people employed
Your Company has been continuously working to advance human resources skillscompetencies and capabilities within the Company which are critical to achieve desiredresults in line with our strategic business ambitions. Some key initiatives that have beentaken in this direction during the year under review are summarized below:
COVID Heroes Day - To meet our customers expectations our front end teamscomprising of store staff field sales warehouses and factories worked in tandemfollowing the various restrictions guidelines and protocols issued by State Governments.At the time when even local transportation was not available our teams ensured that theright products are delivered to our customers at the earliest. In appreciation for theirrelentless support dedication and going beyond the "Call of duty" we dedicated26th August 2021 as "COVID Heroes Day". Our entire team stepped outand visited every store factory and warehouse and shared their appreciation with somegifts and celebrations thanking them for their efforts. Over the week we were able toreach out to our employees at stores/warehouses/RDCs/depots and thanked and appreciatedthem.
Cricket Tournament - Post relaxation of the Covid restrictions with an aim tobuild stronger One Team connects a Cricket match was organised for our employees inGurugram. This proved as a good step for "Getting back to normal" situation andit helped the employees bond on the field and outside of it as offices opened upfor regular hours.
Virtual Connects and Celebrations - We have continued to strengthen our employeeconnect on digital mode on special days and festivals. We have also been able to includethe families of our employees for live games and competitions. We held Townhalls whereinthe CEO briefed on the performance of the Company and future direction. We also took it asan opportunity to recognise employees across departments and locations for their goodwork efforts and achievements.
Customer Centricity -
Revamped Induction Program - We successfully revamped the induction program for newjoiners under the umbrella of WOW (Welcome to our World). The objective is to inspire asense of welcome among all new joiners and business know-how by means ofinter-departmental interactions create awareness of processes and drive in-depth storeinduction. This helps us to bring new talent to speed and contribute effectively in yourCompanys growth. We continued to focus on keeping our internal and externalcustomers at the forefront. The concept of employee satisfaction who are our internalcustomers lead to all aligned approach towards the common goal of customer centricity andbest-in-class experience in product and service.
Covid protocols followed and Hospital Tie-ups - With an aim to keep ouremployees safe and for the continuity of business our respective regional and unit HRteams have ensured that all our employees were 100% vaccinated. Teams were trained onCovid guidelines and ensured effective re-opening of offices as per the Governmentguidelines. Regular communication to keep our employees abreast with Govt. guidelines andinternal advisories were made. Repository for employee demographics was maintained fortimely and adequate support. Tie-ups for hospital and meals were done for immediateattention and support to the employees during hours of need.
Online medical consulting service for all the employees - We tied-up with adigital App partner for providing online medical consultation so that our employees canget adequate support in case of any medical issues / emergency.
Training Learning & Development
Competency development in Retail - During the year under review we developedproblem solving and team developer competencies in our retail network. We have partneredwith a specialist sales and operations organization to provide holistic multidimensionaltechnology driven and future retail ready competency-based sales and operation trainingsto our District Managers and above population through a Train-the-Trainer approach whothen cascades these training programs to our field workforce thereafter.
Manufacturing Curated Program offerings - We have curated courses addressing theneeds of the manufacturing vertical. These self-development programs cater to CoachingNegotiation skills of concerned managers apart from advancing their communication skills.
Online Learning Programs - We re-launched learning platform iGROWfor our employees. With an aim to enhance the learning opportunities we expanded ourlearning catalogue of courses based on the training needs identified through the BataPerformance Review process. During the year under review 65% employees completed one ormore training programs. These training programs provide a wide curriculum includingleadership skills digital marketing strategic thinking innovation supply chain etc.
Internal Growth - Internal Job Postings and Internal movements remained focusareas to support the business with opportunities for our employees to learn perform andgrow within the organization. STEP UP and Career Ladder for the store teams were programsthat were implemented with Assessment Centers assessing Bata Competencies.
Agile Workforce - Keeping in mind the changing aspects and working environmentof business we have introduced
Flexible working model for offering better agility flexible timings and enhancedcustomer service basis business requirements. This model also supports our frontline storeoperations.
Leadership Development - Our flagship programs Bata Leader and Bata Highflyerswere introduced in collaboration with Schlageter Institute Germany to address thedevelopment need of High performing employees. The objective of these interventions is tosupport the development journey to create Bata leaders of tomorrow ahead.
Talent Acquisition - Bata continues to be recognized as an Employer of Choice.
Talent Assessment - For the first time at Bata we implemented a TalentManagement Review (TMR) process which covered the internal Bata India talent landscape. Toassist each department critical roles were identified talent pipelines were created andcomprehensive talent mapping was completed. A development plan and defined career path forhigh potentials through training and internal functional cabinets were created.
Diversity & Inclusion
We continued our focus on our Diversity & Inclusion agenda across the organization.With the vision of having more diverse workforce we have been rigorously working towardshiring a diverse talent pool. We have made conscious efforts through variouscollaborations with organizations for hiring diverse talent across various levels in ourorganization through all functions and regions.
WForce virtual programs Throughout the year under review we invited expertsfrom the industry and conducted virtual programs with the employees on Mental Health& Well Being Inclusivity & its importance and celebratedInternational Womens Day covering both men and women workforce for thesesessions to listen to best practices and also engage through Q&A sessions thereafter.
Your Company is committed to provide a work environment free from harassment of anykind and in particular a work environment that has zero tolerance for sexual harassment.We conducted Prevention of Sexual Harassment at Workplace (POSH) virtualawareness sessions for all employees at a Pan India level.
We built Employer Brand Value through participation in external awards -
CII Award - HR Best Practices in Business Partnering awarded first prize(our 2nd GOLD trophy consecutively in 2 years).
North Indias Best Employer Brand in 2021 - Bata was recognized for its HRstrategy linked to business agile People policies Talent Management practices andcultivating competencies for the future to enable building the organization to befuture-ready.
Your Company believes in developing long term relationships with all our employees onan ongoing basis. Industrial relations at all the manufacturing units of your Company havebeen harmonious and peaceful with active involvement of the employees in the collectivebargaining process. Your Company has also encouraged wholehearted participation of theemployees and union in improving productivity as well as quality of its products.
As on March 31 2022 there were 4357 permanent employees on the rolls of your Company.
There are certain Statements which have been made in the Management Discussion andAnalysis Report describing the estimates expectations or predictions may be read asforward-looking statements within the meaning of applicable laws andregulations. The actual results may differ materially from those expressed or implied. Theimportant factors that would make a difference to the Companys operations includedemand-supply conditions raw material prices changes in Government Policies GoverningLaws Tax regimes global economic developments and other factors such as litigation andlabour negotiations.
BUSINESS RESPONSIBILITY REPORT (BRR)
In compliance with Regulation 34(2)(f) of the Listing Regulations read with the SEBICircular No. CIR/CFD/CMD/10/2015 dated November 4 2015 your Company has prepared a BRRin the prescribed format for the financial year ended March 31 2022 describinginitiatives undertaken by it from an environmental social and governance perspectivewhich is annexed to the Boards Report and marked as Annexure - IX. The BRRhas been uploaded on the website of the Company at www.bata.in and is available atthe link https://www.bata.in/bataindia/a-29_s-181_c-42/investor-relations.html
Annexures forming part of this Report
The Annexures referred to in this Report and other information which are required to bedisclosed are annexed herewith and form part of this Report:
I Secretarial Audit Report
II Corporate Governance Report
III Particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo
IV & V Annual Report on CSR activities and CSR Policy (Salient features)
VI Nomination and Remuneration Policy (Salient features)
VII & VIII Disclosures on remuneration of directors and employees of the Company
IX Business Responsibility Report
Your Board expresses its deep sense of gratitude towards the customers for theircontinuous patronage and remains committed to serving them by delivering more style andcomfort at every step. Your Board is grateful to our business partners suppliersvendors associates and dealers as well as the regulatory authorities of the Central andState Governments in India associated with your Company in its progress and places onrecord its appreciation for their support and co-operation. Your Board looks forward totheir continued assistance in future.
Your Board is deeply grateful to our investors and shareholders for the unwaveringconfidence and faith in us. Your Board is also thankful to the Bata Shoe Organization(BSO) for their guidance and support throughout the year.
Your Board also acknowledges and appreciates the Independent Directors and theNon-Executive Directors of your Company for their contribution by way of strategicguidance sharing of knowledge experience and wisdom which helps your Company to takethe appropriate decisions in achieving its business goals.
Your Board places on record its deep appreciation to the employees workmen and staffincluding the Management headed by the Executive Directors for their hard work dedicationand commitment particularly during the pandemic and overall challenging businessenvironment. Your Board places on record their special gratitude towards the front linestaff working in our stores.
The ownership and responsiveness shown by all stakeholders during the pandemic isinimitable and is a testimony of the spirit of this great organization.
| || ||For and on behalf of the Board of Directors |
| ||Gunjan Shah ||Vidhya Srinivasan |
|Place : Gurugram ||Managing Director and CEO ||Director Finance and CFO |
|Date : May 25 2022 ||DIN: 08525366 ||DIN: 06900413 |