Resoling Bata: The brand's still got soul

For a company that has dominated the Indian footwear industry for 72 long years, Bata India's inexorable woes seem ironic. Last year, Bata sold 60 million pairs of footwear, racking up Rs 760 crore in revenues. While that was actually a 9 per cent drop in sales, net losses almost doubled to Rs 7.41 crore. At the root of Bata's problems is its bloated and unruly workforce of 8,500-plus. Not surprisingly, then, the current round of restructuring at Bata envisages a dramatic change in strategy: Instead of making nearly 60 per cent of its footwear itself at four different factories, the company plans to focus only on marketing. For starters, it will spin off the two big facilities in Mokamghat and Faridabad into separate companies. All loss-making stores are to be replaced by large-format stores, and the brand Bata is to be reinforced in the consumer's mind. "We feel it is absolutely imperative to try and build on name Bata not just as a product, but as a corporate entity that is perceived to have a strong marketing focus," says M.J.Z. Mowla, Senior Vice President, Bata India.

The emphasis on outsourcing is to be accompanied by a focus on new designs. The company has already introduced two of the Canadian parent, Bata Shoe Organisation's most popular brands, Chiara and tino. While Chiara is a range of velcro-taped multipurpose casual sandals, tino is a range of men's dress shoes. Simultaneously, Bata is increasing its products under the Weinbrenner range to take on competition from rivals like Woodland. In effect, the message that its CEO of 10 months, S.J. Davies, is sending out is simple: marketing is the key to Bata's survival. Whether the strategy works this time around is, of course, a different issue.

-Debojyoti Chatterjee

DASH BOARD

A
This one is easy. Just when everyone was writing the last chapter in the Infosys story, the company came out with results (and better still, a guidance) that surprised the market and showed the world that it had learned to live with pricing pressure. CEO Nandan Nilekani has reason to feel pleased.

A-
The negative sign attached to this grade comes largely from regulatory concerns, but fact is Reliance Infocomm's Mukesh Ambani has pulled off a coup with his aggressive Monsoon Hungama promotion that has sent the competition, literally scrambling for cover. Bravo.

EXECUTIVE TRACKING
Corner Room Chronicles...
...Continued. Or should we say, "we told you so".

Rajeev Dubey: Out of the corner room

The trend of CEO-exits continues. And this time, it is clearly the case of a CEO getting on the wrong side of the perform-perish equation. Late in the year 2000, when Rajeev Dubey took over as CEO of Rallis, he was, at 46, one of youngest execs ever to head a Tata Group company.

The new CEO got to work rationalising the company's operations, exiting a few businesses such as pharmaceuticals and leather chemicals, selling excess real estate, and restructuring its finances. He also hired four management consulting firms to help him do all these. Last year, the Tata Group made him Managing Director. Still, Dubey obviously hadn't done enough. Rallis' sales nosedived from Rs 1,037.68 crore in 2001-02 to Rs 845.89 crore in 2002-03. And its bottomline plunged: it made a net profit of Rs 58.75 crore in 2001-02 and a net loss of Rs 77.27 crore in 2002-03. In early July, Dubey resigned from his post and was replaced by Dr Venkatrao S. Sohoni. Headhunting circles claim Dubey will be relocated within the group, although the man himself wouldn't comment on his future.

Dubey's exit comes on the heels of the departure of another high profile CEO, Cisco India's Manoj Chugh (as was reported in this magazine earlier). The ''43-years-young'' Chugh is still making up his mind on his next assignment. ''It could well be software, BPO, and what have you, but I'll be taking a decision in the next two weeks,'' he says. As for the buzz in the exec search domain about Chugh poaching a few loyalists from Cisco, he is pleasantly surprised. After all, ''people work for people and so if they leave (Cisco) following suit, that's okay''. Still, it's an exciting time for CEOs and wannabe-CEOs in India Inc: just think of all those vacant corner rooms.

-Moinak Mitra

Democratic Rich
The rich, it seems, are the same everywhere.

Guess where LVMH watch and jewellery (India) gets its most revenue, after Delhi and Mumbai, from? Bangalore? Wrong. Hyderabad? Wrong again. Chennai? Nah. The city, surprise, is Ludhiana. That the rich, be they from Mumbai or Indore, have similar aspirations and consumption habits was something marketers were beginning to realise. Only, marketer researcher A.C. Nielsen-org Marg has come up with a surprise finding: Levels of ownership of consumer durables such as laser discs, mp3 players and home theatre systems among the affluent-determined by ownership of at least four high-priced durables-in smaller metros are actually higher than those in the Big Six metros (See table, and the list includes Bangalore and Hyderabad apart from the usual suspects). Says Kenneth Serrao, Marketing Manager, LVMH India: "While the depth of the semi-urban market is not so much, there are pockets of affluence, besides which promotional and marketing costs are lower." LG Electronics derived almost half of its revenues from semi-urban and rural India in the last six months. Even car makers like Hyundai are organising road shows in smaller towns such as Mathura and Panipat, and have seen their local sales grow by 10 to 15 per cent. While increasing disposable incomes and higher consumption may be the obvious reasons, A.C. Nielsen researchers point out that cheaper brands from the grey market may be a big driver of high levels of penetration. Maybe. The lesson for marketers: Don't ignore the small-town rich.

-Dipayan Baishya

EM&A
Mutual Interest

Whhen Tata MF bought three schemes of Indian Bank three years ago, the deal seemed like an exception. But since then, a steady trickle of M&A deals (See Mutual Moves) have worked on the contours of the industry. And the trend may well continue. Close on the heels of HDFC MF's purchase of Zurich's funds, Principal mf (formerly IDBI Principal MF) has snagged the schemes of Sun F&C. Principal has assets in excess of Rs 2,000 crore with 1.8 lakh investors. The merger will add another Rs 500 crore in assets and 70,000 investors. Says Sanjay Sachdev, CEO, Principal: "The acquisition is a strategic fit for Principal Financial group's plans for India, and will help us strengthen our presence.'' Sun was among the early entrants in the industry, and Principal on its part has been beefing up its distribution and services. As pressure on fund managers builds, more consolidation could take place in the industry.

-Shilpa Nayak