Bata India Ltd, which has recently separated the marketing and retail division from the manufacturing department, is now contemplating setting up two separate companies -- one as a pure marketing entity and another as a dedicated manufacturing company.

However, top sources in Bata India Ltd refused to talk on the issue. The company's official spokesperson denied any such move.

However, sources close to the development said that the company was working on the proposal and only the issue of holding in the hands of the foreign promoter was yet to be decided. The foreign promoters of the company, of the same name, at present hold 51 per cent stake.

One option would be that the foreign promoter would hold 51 per cent in each of these companies.

Another possibility could be splitting the shares into two, so that existing Bata shareholders received shares of the marketing outfit and the retailing company in a ratio determined by the respective valuation of the two entities.

The company has in fact initiated making separate accounts for retail and manufacturing businesses lately. This was being seen as a precursor to the separation of the two.

In a bid to reposition itself better in the market, Bata had decided to shift some crucial marketing and commercial functions to Delhi.

This was done with the intention of getting a bigger share in the retail boom sweeping Delhi and Mumbai through the rapid development of malls.

Analysts said spinning off manufacturing and retailing into separate companies would help Bata India to focus better on retailing as well on marketing. Bata had been outsourcing a part of its products for years.

Recently, it spun off two manufacturing units, including one at Mokamahghat in Bihar, under a special agreement with a local businessman.

The company's manufacturing arm will be better placed to focus on procurement and manufacturing if spun off, said the source.

The company is in the midst of implementing a three-year business restructuring plan with thrust on retail sales.

Under the plan, Bata has adopted restructuring measures to improve distribution logistics, reduce costs, strengthening merchandising and marketing along with launch of new products. The main thrust of the company is on innovation.

As part of a process of repositioning its image from a manufacturing company to a marketing company, Bata's new emphasis is on marketing of quality products and services, said the source.