 "Gunjan Shah, managing director and chief executive officer, Bata India")
Footwear major Bata India backed the need for a production-linked incentive (PLI) scheme in the footwear sector, saying that such support from the government will strengthen manufacturing wherewithal, increase exports, and position India as a base for global supplies.
“We have been engaging with the government on this and are looking forward to a positive announcement. They have also given some initial signs of that in this year’s Union Budget announcements. We are trying to make sure that the supply chain base in India is utilised globally as well," Gunjan Shah, managing director and chief executive officer, Bata India, told Business Standard in an exclusive interview.
Finance Minister Nirmala Sitharaman had announced a focus product scheme for the footwear sector in her Budget 2025 speech last month. Following the announcement, Union Minister of Commerce and Industry Piyush Goyal said at Invest Karnataka 2025 Global Investors Meet in Bengaluru in mid-February that the government will soon introduce new policies to further promote footwear manufacturing in India, aiming to make the country a global leader in the sector.
According to the Interim Budget documents of July 2024, the Department for Promotion of Industry and Internal Trade (DPIIT) is considering new PLI schemes for the leather and footwear sectors, and the Union Cabinet’s approval is awaited.
“We manufacture almost 50 million pairs domestically. PLI benefits will aid the development of India as a manufacturing base, which can be used for exports globally. We can expand our exports — not just in terms of the number of countries we export to, but also the depth of the portfolio being exported,” Shah added.
Bata India currently exports to 15 countries, including those in Latin America, the Asia-Pacific, the European Union, and Africa.
Speaking about the proposed increase in goods and services tax on luxury items, including footwear over Rs 15,000, Shah said such measures are a result of the government’s revenue compulsions.
“It's a delicate balance, and any government will have to ensure that the balance is done right. There are revenue compulsions, but they also need to be conscious of the tax burden that different consumer segments may be under,” Shah said.
However, Shah added that the recent Budget announcements on tax relief for the middle class will help alleviate stress amid an overall challenging demand environment.
“The recent announcements on income tax proposals for the middle class are very encouraging and should aid some of the middle and mass consumers, who are squarely the target consumers of Bata. We are hopeful that this should aid some demand recovery in the country,” he added.
The company reported a 1.2 per cent year-on-year (Y-o-Y) uptick in net profit to Rs 58.7 crore in the October-December quarter (Q3). Its net sales rose 1.7 per cent to Rs 918.8 crore from Rs 903.4 crore in the same period last year. Shah attributed this rise in net profit to a conscious focus on increased value propositions for consumers.
“This does not always mean lower price points but addressing the entire spectrum of consumers. We have brands that cater to both ends — premium and mass — which is helping us drive up our volumes,” Shah said.
A premiumisation trend in consumer behaviour has also helped the brand drive up volumes. The company’s Floatz brand, launched three years ago, was the fastest to cross the Rs 100 crore revenue mark and is on its way to becoming a Rs 200 crore brand.
“Volume growth was in the mid-single digits in Q3 and outpaced value growth. Within this, we saw premium brands perform better — like Floatz, which retails at double the price of competitors. Affordability and a value-for-money proposition are what we are trying to push, which resulted in some of the volume growth we saw,” he said.
“Going forward, this should get stronger on the back of other measures like supply chain efficiencies and reduction of inventory levels, which have dropped by almost 20 per cent in the past four quarters," Shah added.
