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The Story of Bata - India's Largest Footwear Retailer

Editor, TRANSFIN
Dec 3, 2020 8:36 AM 4 min read
Editorial

Sandeep Kataria, the top boss at Bata India earned the rare distinction of being the first Indian to be appointed as the company’s global CEO.

The news has set social media abuzz for two reasons:

First, proud moment for the country, indeed!

And second, if he is the first global CEO, does that mean Bata never was an Indian brand?

The second realisation took many by surprise. For many Indians who have thought of the ubiquitous shoe brand as a household name for decades, the feeling is similar to that of a child discovering Santa Claus isn't real!

Let's find out the story of how one of the largest shoemakers in the world came into being.

The Origin of Bata

The Bata Corporation was founded 126 years ago on August 24th 1894 by Tomáš Baťa, a Czech entrepreneur in the town of Zlín. After being run as a family-owned business for many decades, the company started exports in 1909. 

The founders adopted sweeping modernisation in production processes to adapt to changing economic conditions brought on by events like World War I, the Great Depression and World War II. Production swirled by 75% in just two years (1926-28), employee-strength rose by 35% and Mr. Baťa emerged as the fourth richest person in then Czechoslovakia. 

 

The Indian Connect

According to Charles Pignal, a fourth-generation member of the original Baťa family, when his great-grandfather visited Kolkata in 1920s, he saw people walking barefoot or with poorly-made shoes on the streets. He thus envisioned serving Indian customers with quality footwear by establishing the factory in a town that later came to be known as Batanagar (near Kolkata). 

Today, India is the company's biggest international market. 

Incorporated in India as the Bata Shoe Company in 1931, the company had its job cut out to take over the Indian shoe market which was dominated by Japanese imports at the time. 

Nevertheless, thanks to novelty, durable usage and concerted marketing of the products, the shoes sold themselves. 

By 1939, there were 4,000 employees working in 86 Bata shops throughout India selling close to 3,500 pairs of shoes on a weekly basis. By 1952, it had set up one of the largest tanneries in Asia (Mokameh Ghat in Bihar).

 

The Story of Bata - India's Largest Shoe Retailer

 

Changing Company Structure

On account of the rise of communism in Czechoslovakia, Bata moved its operations to Canada in 1964. It returned in 1989 when the company was forced to accept nationalisation, a move that ultimately proved fateful for business.

Finally, in 2004, the Bata headquarters were moved to Lausanne, Switzerland and ownership was transferred to Thomas J Baťa (grandson of Tomáš Baťa).

In the process of rebuilding itself, the company adopted a structure based on autonomous operations internationally rather than organising itself in a centralised manner. 

By virtue of this model, 53% of Bata India is currently held by its Swiss parent (Bata Corporation). The company operates through 22 locally-held manufacturing units across five continents and employs over 35,000 people. 

 

Indian Market Perspective

Bata India went public in 1973. The success of the company in India is likely credited to its early entry in an expansive market such as ours at a time when we were one of the most insular and protected markets in the world. In addition, the index of affordability and consumer-centric focus through the offer of qualitative products played a part.

(FYI: The company's growth was so impressive (almost $67m in revenues in 1972) that it had begun exporting not just shoes, but in fact shoe-making machines in the early '70s!)

This run was cut short in the 1990s when Indian markets started opening up to the rest of the world and the brand was faced with a host of problems like labour union disputes, intense competition and price irregularities. 

However, by virtue of its "family brand" status, most notably its association with sale of school-shoes and the "comfort" quotient attached to its products, business remained upbeat. Its popularity as a quintessentially affordable brand in smaller towns also contributes to sustained growth in spite of limited shop hours, sparse merchandising etc. 

 

Fast Forward To the 2000s

Overcoming the woes of the preceding millennium, Bata jumped back into business by gaining a remarkable $1bn market capitalisation and enjoying its enviable presence as a trusted brand. 

South Asia and particularly India is among the top-three revenue generating countries for the global Bata Corporation. The company's stock price has witnessed a 1,600% growth in the last decade (₹98.08 ($1.3) in January 2010 to ₹1,751 ($23.8) in January 2020) with an estimated annual turnover of ₹50,000cr ($6.8bn) annually at present. 

Last year, former Bata India Chairman Uday Khanna even went on to announce his ambitious plans of launching at least 70 new stores each year in the country.

If he was ambitious, then his successor is positively inspired to have announced expansion plans to the order of adding 100 new stores in FY21 in the middle of the COVID-19 pandemic. Although the company posted a net loss of ₹100cr ($13.6m) in the first quarter owing to lockdown-affected sales, this clearly hasn't caused a dent in its growth trajectory.

In the words of Christian Louboutin,

"Shoes transform your body language and attitude, they lift you physically and emotionally". 

Right you are, especially if they lift businesses as formidably as that of Bata India's in the midst of a global economic meltdown! Although to be fair, it doesn't seem far fetched in a country like ours, which accounts for 13% of global footwear production.

FIN.

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