‘Premium footwear growing twice as fast as mass segment’: Gunjan Shah, MD & CEO of Bata India

1) What explains for the sharp 95% decline in profitability in Q4?

There were essentially two one-time impacts during the quarter. One was related to a voluntary retirement scheme at one of our southern manufacturing units as part of a long-term restructuring of our manufacturing footprint. This has been a progressive exercise over the last three years. The second was a non-cash forex restatement impact that we had to account for because of rupee depreciation. Together, these impacted profitability during the quarter. Operationally, however, we had a decent quarter, reporting a nearly 5% y-o-y growth in revenue. This was the second consecutive period of accelerating topline growth, supported by sequential improvement in momentum. Topline growth was also volume-led.

2) While GST tailwinds have helped Bata in the second half of FY26, what is your outlook for FY27 given the inflationary pressures and discretionary squeeze by consumers? Will you take price hikes?

The GST reductions across categories, including footwear, were definitely positive for consumption sentiment. March, for example, was better than January from a demand standpoint. As far as FY27 is concerned, the implications of the West Asia conflict — whether through crude prices, rupee depreciation or supply chain disruptions — may play out over time if the situation prolongs. As of now, on-ground demand momentum remains healthy. We have stayed away from price hikes for now, but the next four to eight weeks will be critical in assessing how costs evolve.

3) What is the company’s long-term growth ambition?

We have a very clear ambition to double our turnover over the next five years. The growth drivers will be premiumisation, digital commerce, network expansion and the broader shift towards casualisation and sneakerisation in footwear consumption. Consumers increasingly want footwear that combines comfort, style and versatility for everyday use.

4) What is the contribution of premium products to Bata’s sales?

Products priced above Rs 1,000 now contribute around 60% of our portfolio compared with roughly 40% three to four years ago. We expect the premium segment to continue growing nearly twice as fast as the mass segment over the medium term. Consumers today are willing to pay for better products, better comfort and a superior branded retail experience.

5) What is Bata’s manufacturing strategy going forward?

Our strategy is centred around consolidation, scale and capability building. Three years ago, we worked with roughly 120 manufacturing partners and had four manufacturing units. Today, we are down to about 60 partners and two manufacturing units. We want fewer, but larger manufacturing partners with whom we can drive better economies of scale and stronger capability investments. At the same time, we are investing in design and technology capabilities both internally and through partners.

6) What is the outlook on retail expansion and digital commerce?

We plan to expand to 3,000 stores in the next 3-5 years from 2,000 stores now. India is urbanising rapidly and we see significant opportunities both in smaller towns and in expanding suburban clusters around large metros such as Bengaluru, Mumbai and Hyderabad. Of the next 1,000 stores, nearly 80% are likely to be franchise-led and about 20% company-owned. Today, our mix is roughly 60% company-owned and 40% franchise. The expansion will largely be focused on tier-3 to tier-5 markets and emerging suburban consumption clusters. As far as digital commerce goes, it is already contributing in low double digits to our revenue. We expect digital commerce to reach about 20-25% of our revenue over the next two to three years.