Bata India

Demand will see boost by festivities in balance period of fiscal

Aug 10, 2020 09:08 IST capital market

Bata India registered a sharp 85% fall in consolidated sales to Rs 135.08 for the quarter ended March 2020 hit by COVID lockdown in April 2020 followed by graded unlocking across the country. The Company witnessed a gradual improvement in business once the lockdown was lifted even as prevailing uncertainties have dampened the consumer demand for discretionary spends. Consequently the at PAT level it was a loss of Rs 101.09 crore compared to profit of Rs 100.97 crore in the corresponding previous period. But for rental concession of Rs 50.14 crore and tax write back of Rs 33.85 crore (a swing of Rs 88.69 crore) the loss would have been even steeper.

The Group has elected to apply the practical expedient of not assessing the rent concessions as a lease modification( as per MCA notification dated 24th July 2020 on IND- AS 116 for rent concessions) which are granted due to COVID-19 pandemic. As per requirements of MCA notification, out of total rent concessions confirmed till June 30, 2020 of Rs 50.138 crore (including Rs.16.249 crore unconditional rent concessions pertaining to subsequent quarters), Rs 20.096 crore has been accounted under rent expenses (to the extent available) and balance of Rs. 30.042 crore is reported under Other Income for the quarter ended June 30, 2020.

  • Operating loss stood at Rs 85.87 crore (against a profit of Rs 243.31 crore in corresponding previous period) as OPM turn negative 63.6% compared to positive 27.6% in corresponding previous period. If we exclude the rent concession accounted in other expenses the operating loss was Rs 105.96 crore compared to a profit of Rs 243.31 crore in the corresponding previous period.
  • Other income was Rs 52.04 crore, a jump of 209% inflated by rental concession. Excluding rental concessions accounted in other income, it was Rs 21.79 crore, a jump of just 29%. Thus the PBIDT was a loss of Rs 84.17 crore compared to a profit of Rs 260.17 crore.
  • After accounting for lower interest cost and flat (up 0%) depreciation, the loss at PBT was Rs 185.08 crore compared to a profit of Rs 155.81 crore in the corresponding previous period.
  • The PBT after EO was a loss of Rs 134.94 crore (against a profit of Rs 155.81 crore) after accounting for rental concession (considering as one off EO Item) of Rs 50.14 crore against nil in corresponding previous period.
  • The taxation was a writeback of Rs 33.85 crore compared to a provision of Rs 54.84 crore in the corresponding previous period. Thus the PAT was a loss of Rs 101.09 crore compared to profit of Rs 100.97 crore in the corresponding previous period.

Yearly performance

Operating income of the company has increased by 4% to Rs 3056.11 crore. The operating profit margin expanded by 1090 bps to 27.2% and thus the operating profit jumped up by 74% to Rs 832.10 crore. The company has adopted IndAS 116 in FY2020 and the impact of it on Rent and other expense was Rs 330.975 crore and Rs 1.787 crore respectively. Thus substantial reduction in Rent on account of INDAS 116 significantly improved the profitability for the period. The PBT was up by 2% to Rs 487.24 crore after accounting for higher other income, higher interest and depreciation. With taxation up by 6% to Rs 158.28 crore, the PAT was flat at Rs 328.95 crore.

Other developments

Distribution channel ramped-up, now reaching 30,000 multi-brand outlets

Franchise store rollout continues with a plan to open 500 by 2023

Factory operations re-started in July, keeping demand & current off-take in mind

Management Comment

Sandeep Kataria, CEO of Bata India commenting on quarterly performance said, It was an unprecedented quarter in Bata Indias history. During the quarter we had low sales and no production due to lockdown mandated by the Government due to the pandemic. Our stores started opening up in a graded fashion, but running operations was a challenge due to frequent lockdowns and restrictions mandated by local administration across the country. We re-started our operations keeping safety of our customers & employees in mind and in line with government and our global standards. The results have to be viewed in this context. The team has responded admirably by focusing on recovery of the business through agile portfolio expansion, scaling up our digital presence via bata.in & e-comm partners and introducing 2 new hyper-local channels Bata Chat Shop for shopping over WhatsApp and Bata Stores on Wheels mobile kiosks that allow customers to shop at their doorstep. In addition, we have increased our focus on franchise store rollout and extending our reach to multi-brand outlets to get even closer to our customers. We are hopeful that the improvement in sale will continue and get a further boost with the festivities in the coming quarter. There is strong focus on cost saving across all cost lines including renegotiating lease rentals, controlling discretionary spends and improving productivity. We have used the past few months to recast our value chain and prepare the Company for the future

Bata India: Consolidated Results

 

2003 (3) 1903 (3) Var. (%) 2003 (12) 1903 (12) Var. (%)
Sales 135.08 882.76 -85 3056.11 2931.10 4
OPM (%) -78.4 27.6 27.2 16.3
OP -105.96 243.31 PL 832.10 477.06 74
Other inc. 21.79 16.87 29 68.68 68.22 1
PBIDT -84.17 260.17 -132 900.77 545.28 65
Interest 27.84 31.35 -11 117.74 3.55 3220
PBDT -112.01 228.82 PL 783.03 541.73 45
Dep. 73.08 73.01 0 295.80 64.05 362
PBT -185.08 155.81 PL 487.24 477.69 2
EO -50.14 0.00 0.00 0.00
PBT after EO -134.94 155.81 PL 487.24 477.69 2
Taxation -33.85 54.84 -162 158.28 148.69 6
PAT -101.09 100.97 -200 328.95 328.99 0
EPS (Rs)* # # 25.6 25.6
* EPS is on current equity of Rs 64.264 crore, Face value of Rs 5
# EPS is not annualised due to seasonality of business
** Variance could not be calculated as no previous period figures
Figures in Rs crore
Source: Capitaline Corporate Database

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