COMPANY HISTORY Company History: Bata Ltd.

is a privately owned global shoe manufacturer and retailer headquartered in Ontario, Canada. The company is led by a third generation of the Bata family. With operations in 68 countries, Bata is organized into four business units. Bata Canada, ba sed in Toronto, serves the Canadian market with 250 stores. Based in Paris, Bata Europe serves the European market with 500 stores. With supervision located in Singapore, Bata International boasts 3,000 stores to serve markets in Africa, the Pacific, and A sia, Finally, Bata Latin America, operating out of Mexico City, sells footwear throughout Latin America. All told, Bata owns more than 4,700 retail stores and 46 production facilities. Total employment for the company exceeds 50,000.

Company Founded in 1 894 The Bata family's ties to shoemaking span more than two dozen generations and purportedly date as far back as 1580 to the small Czech village of Zlin. However, it was not until 1894 that the family began to make the transition from cobblers to industr ialists. In that year, Tomas G. Bata, Sr., along with his brother Antonin and sister Anna, took 800 florins, some $350, inherited from their mother and launched a shoemaking business. They rented a pair of rooms, acquired two sewing machines on an installm ent plan, and paid for their leather and other materials with promissory notes. They produced stitched, coarse -woolen footwear. Within a year, the business was successful enough to enable the Batas to employ ten people in their factory, such as it was, as well as another forty who worked out of their own homes. In the same year, 1895, Antonin was drafted into the military and Anna quit the business to get married, forcing Tomas to assume complete control of the venture. He was just 19 years old.

In 1900, Bata moved the operation to a new building located close to Zlin's railway station and took the first major step in industrialization, installing steam -driven machines. The company enjoyed success producing light, linen footwear that appealed to a large portion of the population, who could not afford better -made leather shoes. Nevertheless, Bata came close to bankruptcy on more than one occasion and concluded that in order for his business to survive he needed to find more efficient ways to manufac ture and distribute shoes. In 1904, he and three employees took a trip to the United States to learn firsthand the ways of mass production. Bata spent six months working as a laborer on a shoe assembly line in New England. On his way back to Zlin, he also took time to visit English and German factories. Upon his return home, Bata began to transform the family shoe business, not only by applying the latest production techniques --which would one day earned him the moniker, "the Henry Ford of the shoe industry "--but also by finding a way to preserve the role of workers, which all too often changed dramatically during the transition from an artisan to an industrial approach to commerce.

The Bata shoe business began to experience steady growth, so that by 1912 it was employing 600 full -time workers plus another few hundred who worked out of their homes in neighboring villages. Tomas Bata now began to exhibit another side to his personality, the social idealist. Because there was a shortage of housing in Zlin for his new workers, he constructed new homes, which he rented at cost. He also offered inexpensive meals in factory cafeterias and free medical care. He even built a new hospital to care for his workers. However, as soon as they began to earn higher incomes, area merchants raised prices. In answer, Tomas Bata opened his own less -expensive company stores to ensure that his employees were able to enjoy the fruits of their success. He also took steps to identify management talent among the ranks of his workers a nd instituted a training program that was ahead of its time.

Tomas Bata continued to innovate, improving on productivity primarily through the introduction of an assembly line approach. After five years, productivity improved 15 -fold; after ten, the reta il price of Bata shoes dropped by 82 percent. The employees' faith in Tomas Bata was also rewarded. After accepting a severe wage cut in 1922, by 1932 they had seen their salaries doubled. They were now working for the largest shoemaker in the world. According to company lore, in fact, in some developing countries "bata" gained currency where there was no word for "shoe." Moreover, Bata became involved in a variety of other industries, including socks, leatherwork, chemicals used in leather making, shoemaking machinery, wooden packing crates, tires and other rubber goods. The company launched its own film studio to produced advertising materials, and it soon evolved into a full fledged enterprise that produced some of the earliest animated films. Because of the company's involvement in transportation, as Bata became the world's largest exporter of shoes, Tomas Bata even became involved in the manufacture of airplanes through the Zlin Air Company, which produced both sporting and business planes. He also becam e famous for housing his headquarters in the tallest reinforced concrete office building in Europe, which featured an elevator that housed his "floating office." With a push of a button, Bata was able to confer, and keep an eye on, his employees on every f loor without leaving his desk. Bata established operations in new markets, such as Singapore in 1930. The company, which in 1931 adopted a joint stock company form of organization, also established subsidiaries and shoe factories in a number of European c ountries as a way to circumvent tariffs that had been imposed in response to a worldwide economic depression. In mid -1932, Tomas Bata called together his team of executives and announced that in order for the company to weather increasingly difficult econo mic conditions and drive further growth, they would have to look to more distant markets, in particular North America. Just two days later, however, Tomas Bata was killed when an airplane he was in took off in a thick fog and crashed into a chimney of one of his buildings. He was 56 years old. In the 1970s and 1980s, the manufacture of shoes began to shift increasingly to Pacific Rim countries, where lower labor costs provided a competitive edge that proved devastating to shoe companies around the world. W ith its widely cast operations and well -established distribution network, Bata was better able to compete, but it too suffered from a softening in its business.

Background Bata Shoe Company (Bangladesh) Limited is a leading footwear manufacturing and merchandising company with a powerful combination of skills and resources that providesa platform for delivering strong growth in todays rapidly changing footwear industry. As a subsidiary of Bata Shoe Organization (BSO), the principal activities of the comp any are manufacturing and marketing of footwear and hosiery products. It conducts the operational activities in Bangladesh as a principal with its own set -up of manufacturing, marketing and distribution. The company has retail and non retail sales departme nt. It has also dealer stores, DSP (Dealer support program) stores, wholesale stores etc. Among the retail channels are city stores, family stores, Bata Bazaars, and super stores. Taking into consideration the consumer demand in various market segments for new styles and designs without ignoring the necessity for volume sales, the company is constantly introducing new products in all categories. It is always trying to bring new products and new brand names to attract different segments of customers form i nfants to old. Bata shoe possesses a different outlook due to the excellent technical assistance, innovation in manufacturing, efficient marketing and management information system. The company is playing a major significant role in influencing Bangladesh s economy. Its sponsorship in various social activities cannot be left unmentioned. Human resource development is always a matter of great concern of the company. For generating skilled manpower it has intensive training program both in home and abroad. Th e Company has over 1436 number of total employees with an efficient management team and operating very smoothly.

The authorized capital of Bata Shoe Company is BDT 200 million and paid up capital is BDT 136,800,000 with which Bata is one of the most admir ed and respected company of Bangladesh. The company was enlisted at the Dhaka Stock Exchange (DSE) in 1985. As on31st December, 2007, the company had 8541 shareholders with 13,680,000 shares.Considered by many a blue chip company in DSE, Bata has a book va lue of BDT 60.13 andmarket value of BDT 223.60 on December 2007.

The balance sheet and income statement of a company are analyzed by the Equity shareholders of the company not only to get information about current profit and liquidit but also to find out the value of their investment. Value of the investment means the worthof the own funds of the company from various angles. Own funds are the amounts deployed by the shareholders as well as funds belonging to the shareholders used by the company for its business operations. The book value of the shares of a company refers to the value of own funds for each share of the company. The market value of a company's share refers tothe price that is quoted in a recognized stock exchange at which the shares of the co mpany can be bought or sold. The purchase and sale rates at the exchange are determined by a number of factors for example, the profitability of the company, its profit potential, the number of shares outstanding, general market fancy for such shares, and some other certain intangible factors.

The market value can be either more or less than the book value. Market value is determined by the combination of all players in the market such as financial institutions, mutual funds, foreign institutional investor s, securities operators and the common investors. The market price is determined by the equilibrium point of the demand and supply position in the market. The market value is viewed as current earnings, future earnings, industrial growth, competitive advan tage, and so on. The book value of the shares would also be a factor that is taken into account by the market. It is possible for the market price to be more than the book value. Sometimes the net perception in the market for the company has growth potenti al whereas it is likely to perform better than it is doing at present.

On the other hand, the book value can also be higher than the market value. Sometimes, a company may be performing steadily and having a fair book value. The stagnation of growth possibilities, the imminent force of competition, other factors affecting its future chances, the market value of the companys share may be viewed as poor. In this case, the market value can be less than the book value. So the book values and the market values have no distinct correlation at all. Market value is determined on the principle of `outlook', whereas book value is the result of `historical' analysis. So, there ought to be a discrepancy in the book value and market value of a company. In the current s tudy, the content analysis of Bata has been done as an attempt to find out these discrepancies of this company and rationalize those.

Brief Introduction:

Vision: To grow as dynamic, innovative and market driven domestic manufacturer and distributor, with footwear as our core business, while maintaining a commitment to the country, culture and environment in which we operate.

Mission: To be successful as the most dynamic, flexible and market responsive organization, with footwear as its core business.

Current State of Entity: This year, overall sales turnover grew by 12% for the year, despite a very poor first quarter and negative effect of the earthquake in the last quarter. The sales growth came predominantly from the retail division which mana ged to achieve a very creditable growth of 17% in sales. The performance in the very important last quarter was particularly impressive with sales growing 30% over the corresponding period of year. The operating profit for the year was Rs. 184.5 million wh ich was only marginally better than previous year due to higher expenses. Profit before tax amounted to Rs. 128.5 million compared to Rs. 178.2 million the previous year. Directors have decided to recommend a final cash dividend at 40% for 2005. The sum of Rs. 53 million is being transferred to general reserves.

Product Obviously Bata Indias products are footwear.

BRANDS:
Bubble Gummer Hawai Hush Puppies Marie Claire Power Sandak Weinbrenner

Target Customer: Footwear for children, young, old, male & female is the target customers for Bata Pakistan.

Target Market: The target market for Bata Pakistan is the whole Pakistan market.

MARKET SHARE:
In spite of having competitors like, Liberty and others, Bata still leads the way with 40% of the Indian F ootwear Industry, with the help of its 26 Wholesale depots serving 299 Wholesalers and 4,600 + Retail Showrooms serving 1 million customer per day.

Analysis Tools: Financial analyses are basic techniques used by investors and managers to analyze basic financial statements. These analysis are generally begins with the calculation of a set of financial ratios designed to reveal the relative strengths and weaknesses of a company with other companies in the same industry and to show whether to companys positi on has been improving or deteriorating over time. These analyses are also helpful for the future planning. We can say that these analyses provide a sound base for making future planning. For example these financial analyses can be used for: Innovation of new products. Determines the interest rates at which money should be borrowed. Reducing the continue losses by making effective planning. Determines the strength of the firm to pay its debt as well as its fix cost. Gives the information about the wealth of owner.

Distribution Channels

Bata India markets its products through three distinct channels.

Company operated retail outlets: The Company operates its own retail network of over 1,100 retail stores spread across the country. These outlets are serviced through six distribution centres spread out geographically and each responsible for a particular region The process flow begins wi th the transportation of the finished products from the Company.s manufacturing units and contract manufacturers. plants to the distribution centres through the services of third party carrying and forwarding agents. The distribution centres in turn transp ort these products to the Company operated retail outlets based on specific demand requirements. These retail outlets are manned by the Company.s employees and exclusively market the Company.s footwear brands. As part of its strategy to provide complete fo otwear solutions to customers, the retail outlets also market accessories like shoes laces, socks, shoe polish. In certain outlets, the Company also provides cosmetic services like pedicures, etc.Out of the 1,100 retail stores, the Company has designated 8 4 stores as factory outlets which are used to sell merchandise at marked down prices. These factory outlets are used primarily by the Company to sell surplus or non -moving products and factory seconds stocks. Institutional sales as well as supplies to the civil and defence agencies are also taken care of through the Company.s distribution network. The Company has designated specific senior managers to oversee the marketing to this segment of buyers. The requirements are directly supplied from the Company.s distribution centres.
 Dealer Network

The Company also uses the dealer network of the footwear industry to market its products.Through this channel, the Company supplies its products to non -exclusive wholesale distributors who in turn distribute the Compa ny.s products to independent dealers across the country. The dealers covered under this channel are non -exclusive Bata dealers and hence sell footwear andrelated products of other companies also.
 Market Extension Programme

The Company is undertaking step s to generate volume business in semi -urban markets and markets which are un-represented and under -represented footwear markets, pursuant to its Market Extension Programme, through authorised Bata dealerships. Under this programme, the Company appoints aut horised dealers, subject to certain selection criteria who run outlets which exclusively market the Company.s products and adhere to rules and regulations of the Company. As on date,there are 470 such outlets in the country. The dealer outlets are not mann ed by Bata employees but are manned by the employees of the private dealer.

Exports

The Company exports footwear to countries like United Kingdom, Middle East, France, Papua New Guinea and Singapore. Exports are primarily bucketed into exports to BSO companies and non BSO markets. In recent times sales to BSO companies has reduced to marginal amounts. Non BSO operations can broadly be classified into three geographically defined groups: United Kingdom This is the largest export market for the Company with canvas shoes being the main productexported. The exported products are supplied direct to leading retail chains in the UK who sellthese products under their own brand name rather than that of Bata. South-East Asia and Pacific Rim Countries The major products exported to these markets is the Bata Hawai range of chappals /slippers. Theproducts are sold directly to leading retail chains and under the Bata brand name. Middle-East Asia Major products catering to this export market are leather shoes and chappals. The Companymarkets these products to wholesalers in the respective markets and under its own brand name.

Strengths, Weaknesses, Opportunities and Threats

Strengths
 The brand .Bata.is closely identified with footwear by consumers  An extensive retail network of owned and franchisee stores enables the Company to reach out toconsumers across the length and breadth of the country  The Company.s own tanneries located in Batanagar and Mokamehghat ensures uninterruptedsupply of raw mat erials  Six manufacturing locations enable the Company to schedule production to meet demand for alarge number and varied categories of footwear  Being a part of the Bata Shoe Organization gives the Company access to new designs, brands andproduction tec hnologies

Weaknesses
 The Company has a large labour force resulting in high employee costs  The Company has been in existence for more than seven decades and faces a challenge in switchingto new production technologies

Opportunities
 India is a very large market and offers good demand potential for footwear which is an item of massconsumption Low per-capita footwear consumption in India provides opportunity to the Company which haslarge production capacity spread over six locations  The Company sees potential in leveraging the .Bata. brand for marketing other merchandiseconsumer products

Threats
 The Company faces competition from the unorganized market which is able to sell footwear at lowcost due to lower overheads and manufacturing costs  Opening of the Indian market to imports has resulted in the Company facing competition fromcheap imports

Strategy of the Company The Company.s management has evolved the strategy of the Company after considering the Company.sstrengths and weaknesses. The Comp any believes that this strategy will enable the Company to build onthe opportunities in the market. Cost optimization and margin improvement The Company is focusing on margin improvement and cost effectiveness programmes which havestarted yielding results. The Company has initiated strict control on costs in purchases and outsourcingand is looking at global sourcing for raw materials to improve the net realization. The Company hasalso been clearing old merchandize through discount sales, write-offs, etc. which will enable it to focuson improving sales. Rationalizing and re -engineering As part of the rationalization of work practices, processes and modernization the Company offeredVoluntary Retirement Scheme (VRS) to its work force. 1520 employees have accepted the VRS in year2004. The Company plans to introduce a new VRS in year 2005. The VRS is expected to reduce theCompany.s employee cost in the medium term. The Company has modernized seventeen stores, openedtwenty new stores and closed down sixty unviable stores. Focus on collecting old outstanding dues The Company.s sales team is fully focused on collecting old outstanding amounts from wholesalersthus reducing working capital. The Company is adopting a dual policy to collect the old outstanding.On one hand the Company is negotiating settlement with the wholesalers and offering discounts tothose willing to pay the reduced amount. At the same time the Company is filing legal cases againstthose who are not willing to settle and pay. Training and restructuring the frontline sales force The Company has reorganized its front line sales force and has promoted its best performing shopmanagers as district managers. It has undertaken an intensive training programme for its shop assistantsand managers to ensure excelle nce in service to the customers. The Company has also undertaken arural marketing thrust where the market is growing faster than the urban markets. The Company isbringing in young managers with fresh ideas to inspire and empower the workforce with the requ isiteskills. Brands and designs The Company is consistently trying to leverage on its established brands like Mocassino, Super Stride,Quo Vadis, Jubliee etc. at the same time create a niche for its new brands like Azaleia, Toppers,Bubblegummers, Weinbrenne r and Power International. The Company has been focusing on specialtyvalue added products for better margins. It has been continuously introducing new designs in shoes formen, ladies and children. The Company is endeavouring to break the myth of the price factor, byintroducing an economy range of products that will encompass both style and quality.

Employees and Industrial Relations

At Batanagar, the biggest and oldest plant of the Company is located. This unit has witnessed its lastindustrial unrest in 1992, when there was a strike from January 3 to May 25. This strike was resolvedthrough tripartite settlement for a term of three years, which expired in 1995. The next settlement ofwages was signed at a bipartite level, without disruption of work by a lon g-term agreement with BataMazdoor Union representing employees of Batanagar and Calcutta offices. During the years 2002, 2003 and 2004, the Company has entered into agreements with its eightrecognised trade unions wherein the Dearness allowance was capped . The Long Term Agreements wereconcluded with the trade unions of Shop Employees and Factories located at Bataganj, Mokamehghat,Batanagar, Faridabad, Peenya and Hosur. In addition, the agreements with the All India Bata ShopManagers. Union and the All Indi a Bata Shop Employees Union were also concluded in January 2004. The Company.s agreement in relation to its Faridabad factory is due to expire on April 29, 2005.

Employee Categorisation
Employees of the Company are categorized along the following grades, in descending heirachical order:
 Directors  Senior Managers (Senior Vice President, Vice President, General Manager)  Middle Managers  Junior Managers  Selling personnel  Shop Managers  Shop Employees

Training and Human Resource Development

The Company lays a great deal of emphasis on training and updating skills of its employees. Tofacilitate this process, the Company maintain training facilities at its factory at Batanagar. Training isimparted to employees both in the classroom as well as on the shop floor. Key programs conducted bythe Company include:  Regular training for Management Trainees conduced over a period of one year, including sixmonths on-job and six months in al lied fields for the employees  Storemanco training for newly recruited/ promoted Shop Floor Managers conducted every twomonths  Managerial skill development programs for newly recruited District Managers on a quarterly basis  Mandarco training for middle management level employees to impart basic managerial skills Workers training program to provide on the job training for basic shoe making to direct workers inthe Company.s factories.