INTRODUCTION

GST is known as the Goods and Services Tax. It is a type of indirect tax which has replaced
many indirect taxes in India such as the excise duty, services tax, VAT, etc. On 29th of March,
2017, the Goods and Services Tax Act was passed in the Parliament which came into effect
on 1st of July, 2017.
GST is levied on goods and services after its supply. Since the Goods and Services Tax Law
in India is a comprehensive, multi-stage, destination-based tax that is levied on every value
addition, GST was introduced as a single domestic indirect tax to curb down the multiple tax
paying system.
In other words, we can say, GST could be a tax which is levied on the consumption that is
implemented on manufacture, sale and consumption of products and services at national
level. It is a type of tax that will remain same for all indirect tax levied by state and central
government. It is also a noteworthy consideration that after introduction of GST some of the
other taxes like income tax, export tax, corporate tax including capital gain tax will not be
affected in any manner. In the case of intra-state sales, Central GST and State GST are
charged. All the inter-state sales are chargeable to the Integrated GST.1

LEATHER INDUSTRY IN INDIA

Over several years the Indian leather industry has undergone several changes from being a
mere raw materials exporter in the early 60’s and 70’s to an exporter of finished, value-added
leather products. The main reason behind this transformation is the policy initiatives taken by
the Government of India. Among top 8 industries of export revenue generation in India
leather is one of them, holding 10% of the global raw material, and 2% of the global trade.
Leather is one among the most traded commodities in the world. Due to substantial export
earnings, the leather industry occupies an eminent place in Indian economy. The Indian
Leather industry accounts for around 12.93% of world’s leather production of hides and
skins. The country ranks second in terms of footwear and leather garments production in the
world and accounts for 9.57% in world’s footwear production.

BATA INDIA LIMITED

ABOUT THE COMPANY
Bata India is the largest retailer and leader manufacturer of footwear in India and is a part of
the Bata Shoe Organisation. It was incorporated as a private limited company in 1931 the
company was setup initially as a small operation in konnagar near Calcutta in 1932 and in the
years that followed the overall side was doubled in area. This township is popularly known as
Batanagar. It was also the first manufacturing facility in Indian shoe industry to receive an
ISO: 9001 certification. The company went public in 1972 when it changed its name to bata
India limited. It operates a large non retail distribution network through its our wholesale
division and caters to millions of customers through over 30,000 dealers.

1
Ankush Sachdeva, “Impact of GST on Import Export Market”, September 26, 2017, available at:
https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=7629
It is one of the world's leading shoemaker by now and designs stylish and comfortable
footwear at surprisingly affordable prices and serves over 1 million customers a day in 5300
stores and producing locally in its 23 Bata-owned manufacturing facilities across five
continents.

ANNUAL REPORT OF 3 YEARS PRIOR TO GST IMPLEMENTATION

In the financial year ended March 31, 2016 Bata recorded a gross turnover of Rs. 24,512.6
Million as compared to gross turnover of Rs. 27, 376.0 Million during the fifteen-month
period ended March 31, 2015. The company’s Net Profit stood at Rs. 2187.5 Million as
compared to the Net Profit for the fifteenth month period end year March 31, 2015 which was
Rs. 2,311.7 Million. The financial performance of the company for the previous year was not
comparable, since the twelve-month period performance was not recorded.
On a consolidated basis, Bata recorded a turnover of Rs.24,585.7 Million during the financial
year ended March 31, 2016 and achieved consolidated Net Profits of Rs.2,185.4 Million for
the said financial year.
Prior to the implementation of GST during the financial year end March, 2017, the company
recorded a turnover of Rs. 24,972.4 Million as compared to the turnover of Rs.24,485.9
Million recorded during the previous financial year ended March 31, 2016.The net profit for
the company stood at Rs. 1,587.5 Million as compared against the Net Profit of the financial
year ended March 31, 2016 which stood at Rs. 2,175.9 Million
On a consolidated basis, Bata recorded a turnover of Rs.25,043.4 Million during the financial
year ended March 31, 2017 and achieved consolidated Net Profits of Rs.1,589.5 Million for
the said financial year.
In the financial year end March 31, 2018, a turnover of Rs. 26363.18 Million was recorded as
compared to Rs. 24972.41 Million which was recorded during the previous financial year
ended March 31, 2017. The Net Profit was recorded for the financial year ended March 31,
2018 which stood at Rs. 2235.78 Million as compared to the Net Profit of Rs.1587.48 Million
which was in the financial year end March 31, 2017.
On a consolidated basis, Bata recorded a turnover of Rs. 26412.16 Million during the
financial year ended March 31, 2018 and the Net Profit of Rs. 2205.13 Million for the said
financial year was achieved.

ANNUAL REPORT OF 3 YEARS AFTER GST IMPLEMENTATION

After the implementation of GST, a gross turnover of Rs. 29,311.03 Million was recorded in
the financial year 31st March, 2019 as compared to gross turnover of Rs. 26,412.16 in the
financial year 31st March, 2018. The Net profit for Bata stood at Rs. 4,776.87 Million as
compared to the Net Profit for the fifteenth month period end year March 31, 2018 which was
Rs. 3,370.40 Million.
On a consolidated basis, a turnover of Rs. 29,993.23 Million during the financial year ended
March 31, 2019 was recorded and a Net Profit of Rs. 3,289.94 Million for the said financial
year was achieved.
In the financial year ended March 31, 2020 Bata recorded a gross turnover of Rs. 30,535.51
Million as compared to the previous financial year ended March 31, 2019 where the gross
turnover was recorded to be Rs. 29,284.44 Million. The company’s Net Profit stood at Rs.
4,850.77 Million as compared to the Net Profit for the fifteenth month period end year March
31, 2019 which was Rs. 4,782.65 Million.
On a consolidated basis, the Company recorded a turnover of Rs. 31,222.92 Million during
the financial year ended March 31, 2020 and achieved consolidated Net Profit of Rs. 3,269.15
Million for the said financial year.

COMPARISON OF BATA’S FINANCIAL STATUS BEFORE AND AFTER GST

NET
YEAR NET PROFIT (MM) TAX (MM)
TURNOVER(MM)
2015 27372.28 2311.72 974.96
2016 24481.38 2187.48 933.63
2017 25438.87 1587.48 748.27
2018 26871.62 2235.78 1164.36
2019 29969.87 3296.6 1486.05
2020 31222.92 3269.15 1581.62

COMPARISON PRE & POST GST

35,000.00
30,000.00

25,000.00
20,000.00
15,000.00
10,000.00

5,000.00
0.00
2015 2016 2017 2018 2019 2020

NET TURNOVER(MM) NET PROFIT (MM) TAX (MM)

We see that after the implementation of GST, Revenue from operations for the year ended
March 31, 2019 has increased by 11% over the corresponding period last year. The Profit
before Tax for the financial year ended March 31, 2019 reflects a growth of 41% over the
corresponding Profit for the financial year ended March 31, 2018. Bata consolidated its
position as the leading footwear company in India in the year under review delivering double
digit sales growth and improving its profitability significantly.

What has been the on-ground impact of GST? has there been any change in the demand
for shift in consumer preferences?
Yes, as a company for Bata, GST is neutral but in wholesale business that is non-retail
business some impact is there. Some of the dealers are not GST compliance. There are still
many dealers who are waiting to get themselves registered and that business itself is
impacting. But that business is not very great for them. Bata has 85 plus businesses in retail
and rest is in non-retail. That is why impact is not visible but GST impact is there on some of
the dealers.

What has been the change in the market share? What is the strategy with regards to
garnering more market share given the competition that Bata is witnessing after the
GST?
There was no major impact initially but in the long run Bata is expecting to get additional
share from an unorganized sector to organized sector. Bata is one of the major organized
players in footwear industry. Due to non-retail, wholesale business is a little bit sluggish.
That is why soon after GST came, overall impact was not visible but yes in the long run there
has been seen some benefit definitely. As far as the present moment is concerned, the impact
is still visible and is ongoing.
Bata gradual shift towards premiumization is quite visible in the rise in average realizations
as well in FY17. Bata is walking towards the growth and it is trying to keep this trend going.
In fact, what Bata produces and what it introduces to the stores is as per the consumer
demands and nowadays consumers are demanding premium merchandise and that is why
premiumization is a must. Working towards that and going forward definitely will improve
from the current level. At present almost 30% of the products are premiumized and going
forward maybe in the next few months another 15 to 20% will be premiumized.
In May 2020 Bata India limited reported a 56.68 % decline in consolidated net profit at
rupees 30 8.40 crore for the fourth quarter ended march 21 due to covid-19 lockdown. The
decline was primarily attributed to severe disruption in operations caused by the lockdown
but it was gratifying to note that despite closure of its retail outlets in 2020 the company was
able to close the year with turnover and profit growth this was possible on account of focus
on diversification of product portfolio, consumer- centric campaigns, new and franchise store
openings and on retail and digital businesses. The company is now expanding its E-
Commerce footprint and cramping its presence in online marketplaces.