Mumbai, Aug 17: Bata India, the country's premier shoe company, after recording one of the swiftest turnarounds in the domestic corporate history, has managed to check the decline in market share following the now abandoned shift in business strategy of focussing on the upmarket segment.

It has managed to increase market share in the Rs 2,000 crore-plus organised footwear industry to over 26 per cent in the leather footwear category and to around 55 per cent in the non-leather segment, according to recent industry estimates.

The latest figures are against a 24 per cent share in the leather footwear segment and 52 per cent in the non-leather category in the last financial year. During the period, Bata, after recording a Rs 42.16 crore loss in 1995, managed to post a Rs 4.2 crore profit within the next 12 months.

In the first half of 1997, it posted a Rs 8.35 crore profit. The turnaround, in the company's view, has resulted from its reverting back to its earlier business policy-of targeting the mass market by concentrating on the high-volume, low-margin segment.

Liberalisation in the post-1991 period had opened up new avenues for growth and Bata, under the then managing director PK Dutt, decided to cash in on the country's growing middle class by focussing on the premium segment.

A household brand, Bata had become synonymous with mass market products. The radical shift in policy of focussing on the low volume-high margin segment, rather than its core competence area of low margins and high volumes failed to pay off.

The company, in the process, lost its grip over the organised sector and ceded crucial market share to a slew of new entrants in the domestic footwear industry that emerged with liberalisation- Mesco, Action, Lakhani, Phoenix, Liberty, Lotus Bawa and others.

Bata's performance declined, and after it ended the first half of 1995 with a Rs 41.03 crore loss, Dutt was replaced by the current managing director William Keith Weston.

In a board restructuring that followed, several other key personnel were also replaced by expatriates nominees appointed by the parent Bata Shoe Organisation.

Subsequently, most of the key operations now-like finance, retail operations, merchandising, planning and distribution, advertising, product development and business development-are handled by expatriates.

In early 1996, the Canada-based parent bailed the cash-strapped company out by providing an interest-free loan of $10 million to retire high-cost debt and meet working capital requirement, which was later converted into equity as part of its contribution to Bata India's Rs 77 crore rights issue.

The company has conducted a major exercise aimed at minimising inventory, thereby controlling working capital expenditure, and simultaneously boosting sales. Production of non-moving items has been minimised and product lines have been reduced to 1,800 from over 3,500.

Bata has continued to launch new designs in the low-price category with new launches increasing four-fold during the last fiscal to about 200.The company's 1,000-and-odd retail chain, in addition to about 700 franchisee outlets, pose a major entry barrier to new entrants who have to depend largely on multi-product retail outlets.

Concentration on the volumes market has saved Bata from direct competition with multinational rivals Nike, Adidas and Reebok. In fact, Bata has entered into a marketing tie-up with Nike wherein the latter's products will be offered from select Bata outlets.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.