Bata: An uphill task ahead

Three managing directors in 18 months, and still things aren't starting to look up at the embattled footwear major, Bata. Last fortnight, Stephen John Davies took over as the CEO of Bata India from Fernando Garcia, who, only in March 2001, had replaced Chandu Morzaria. Can Davies succeed where the others have failed? We'll soon find out, but the odds are long.

Since 1999, Bata's bottomline has plunged from Rs 30.45 crore to Rs 3.97 crore last year. So what's eating Bata's profits? Its manufacturing costs. Now, having brought in a new director marketing in Jaswant Singh, who was the managing director of Bata's operations in Uganda, the company is revamping its product lines by and dusting up distribution. Old brands like Mocassino and Ambassador are being spruced up courtesy new Italian designers, and some old ones like Weinbreiner are being relaunched. "The whole exercise is to ensure that we maximise our network as an integrated shoe company" explains M.J.Z. Mowla, Senior Vice President.

Given Bata's problems, that doesn't seem to be enough. In the first half of this year, the company reported a loss of Rs 2.12 crore against a net profit of Rs 2.54 crore last year. Clearly, Davies has a lot of cleaning up to do.

-Debojyoti Chatterjee

MARUTI
Starting Trouble
Maruti Udyog's maiden IPO looks like a non-starter.

Osamu Suzuki: Second thoughts?

After years of lobbying for it, Suzuki must be regretting buying out its joint venture partner, the Government of India. Under a deal the Japanese company signed with its partner, it must first make a Rs 400-crore rights issue, where the GOI will renounce its rights in favour of Suzuki, helping the latter raise its stake to 54.2 per cent. That's not a problem. But this is: the agreement also envisages Suzuki guaranteeing Rs 2,300 per share for another 25 per cent of the government's holding, fetching around Rs 800 crore.

The original plan was to offload these shares to the public through an IPO, and six months ago when the plan was worked out, things did look rosy. A bevy of merchant bankers, including Kotak Mahindra, I-Sec, DSP Merrill Lynch, JM Morgan Stanley and SBI Caps, trooped in to assure Suzuki of the plan's feasibility. But with the stockmarket looking iffy, Suzuki now wants the winning m-banker to underwrite the ipo. ''The idea,'' explains a merchant banker, ''is to pass on the risks from Suzuki to the merchant banker.'' Not surprisingly, the bankers-who get 1 to 2 per cent of the IPO in fee-have refused. The government would be within its rights to force Suzuki to honour the agreement. But don't expect Suzuki to yield meekly.

-Ashish Gupta

EXECUTIVE TRACKING
Hanging Up
Escotel CEO Manoj Kohli quits the cash-strapped company.

All is not well at Escotel. There have been rumours of a cash crunch for sometime. And now Executive Director and CEO Manoj Kohli has left. Speaking to BT, Kohli confirmed that he was leaving Escotel. He, however, declined to speak about his future plans in specific terms. ''I have a few options both within and outside the industry. I have an option in software too. I'll take a call in the next two weeks,'' he said. This is not the first time the 43-year-old Kohli has left the Escorts Group. In mid-1997, he quit the top job at Escotel to join Allied Signal, before making a return in early 1999. Whether this departure is permanent or not we will have to wait and see, although his exit does seem sudden, given that there was no talk of his leaving even in early September.

Another mover is T.R. Venkatesh, President (Apparel) at Raymond, and the man handling the Parx and Park Avenue brands. He has shifted to Pidilite (the Fevicol company) as President. Before joining Raymond, Venkatesh was Managing Director at Goodlass Nerolac. We wonder if the recent acquisition of ColorPlus by Raymond has anything to do with this? Meanwhile, another V (with a slightly different spelling to his name), R.C. Venkateish, MD of Kellogg's in India is moving to Japan, where he'll head the cereal-maker's local operations. The VP Sales and Marketing in India Navneet Saluja has moved in to his place. One man's breakfast...

-Suveen K. Sinha and Seema Shukla

INFOTECH ENTERPRISES
That Don't Impress...
A Hyderabad-based engineering services firm gets an investor in Pratt & Whitney. So why isn't the stockmarket thrilled?

B. V.R. Mohan Reddy must be baffled as hell. It's been seven months since the Chairman and Managing Director of Infotech Enterprises signed a deal, roping in aircraft engines manufacturer, Pratt & Whitney, as a strategic investor. But the Infotech stock has been on a slide, falling from a May-high of around Rs 820 to Rs 150 (ex-bonus) when BT last checked.

On the face of it, the market seems nuts. Pratt & Whitney is a division of the $28 billion (Rs 137.2 crore) United Technologies, which also owns companies such as Otis Elevators and Carrier Corporation. Which means if Infotech taps into the United Technologies network alone, it may not have to worry about slowdown. Not that it has had to, so far. Barely 11 years old, the GIS (Geographical Information Services) and engineering services company posted a 49 per cent jump in net profits in 2001-02. And in the first quarter of this fiscal, it pulled in Rs 6 crore in net profits on revenue of Rs 30 crore.

So, what's worrying the stockmarket? Apparently, two of Infotech's three overseas subsidiaries (in the UK, the US and Germany) are incurring losses, and that could prove to be a drag. ''How the company deals with this needs to be seen,'' says Rajendra Naniwadekar, a member of the Hyderabad Stock Exchange. Now for Infotech, there's one more investor watching.

-E. Kumar Sharma

INTERVIEW
"Bad Steel Market Hurt SAIL"

Arvind Pande: A tumultuous yet satisfying experience

For six years, Arvind Pande battled to turn around the ailing steel behemoth, the Steel Authority of India (sail), with little luck. Sure, in Pande's tenure, sail slashed costs by Rs 4,000 crore and workforce by 45,000. But the company is still in the red with accumulated losses of Rs 2,460.62 crore, which has eroded half its net worth. And Pande, as sail's Chairman and Managing Director, took a lot of heat for that. With just days to go before his retirement on September 30, 2002, Pande spoke to BT's Swati Prasad on his tumultuous tenure. Excerpts:

How do you rate your performance as the chairman of sail?

I'm very satisfied. These six years were difficult. When I took over, the years preceding were profitable. The economy was doing well and the steel market was booming. During my tenure, a lot of new capacity came up, but demand didn't grow in proportion. There was pressure on prices.

Last year, the Indian steel industry made a loss of Rs 3,000 crore, although Tata Steel made a marginal profit. But within sail, Bhilai Steel Plant posted a better profit than Tata Steel. The problem with sail is that it's a conglomerate of nine units. Under good market conditions, Bokaro also makes profits. But some like Rourkela Steel Plant, Salem Steel and Alloy Steel Plants are endemic loss-making units.

But you haven't been able to sell any non-core business, barring the four power plants (to NTPC).

Besides the four power plants, we have sold a lot of real estate. We are on the last stage with Salem Steel. Although Tata-Usinor has backed out, we are negotiating with the Jindals.There is a good chance of it happening this year. Similarly, in the case of Rourkela Fertiliser Plant, the only bidder-Deepak Fertiliser-is very keen. There is a good chance of this going through as well. Last year, Bhilai made a profit of around Rs 500 crore. This year, we are targeting Rs 700 crore. But it gets lost in the total system. Bokaro will make good profits this year. Durgapur Steel Plant is making cash profits and Rourkela is coming close to it.

So which unit pulls you down the most?

Last year, Rourkela made a loss of Rs 1,000 crore. That was the largest loss-making unit.

What is the problem with Rourkela?

It's largely a management problem. But there are signs of improvement. There is a fair chance that Rourkela might turn around.

Who has posed most difficulties? The government, employees, trade unions or the market?

Being a navratna we had very little interference from the ministry. The unions have also cooperated. Even employees understood that we were passing through a difficult period. The problems were basically posed by a bad market and an oversupply situation, and that hurt us. We were talking about a change since 1986 when we were in a monopolistic situation. But the actual change came in 1997 when Essar, Jindal and Ispat started putting their products in the market. The quality of their products was superior because they had new plants.

Do you see sail going to BIFR or its navaratna status being taken away, as is being reported in the media, time and again?

No, we won't go to the BIFR. Our net worth has come down to less than 50 per cent of the peak net worth. We will only get registered with BIFR if we have a negative net worth. And that won't happen for many years. Normally, the BIFR asks for a revival package. We already have that in place and have implemented it as well.

Will you miss sail?

Most certainly. I have been here for 16 years. Steel gets into your blood.