Bata India Ltd will merge its subsidiaries, Bata Properties and Coastal Commercial & Exim with itself.
The company also plans to take up financial restructuring, which will include a rights issue and fresh loans from banks and institutions to a maximum extent of Rs 60 crore (Rs 600 million).
The financial restructuring will aim at widening the company's profit margin on sales from 27 per cent to 35 per cent.
Bata was also aiming to launch a second round of its voluntary retirement scheme aimed at 1,000 employees. It has a total of 11,300 employees and 4000 floor staff.
As part of the financial initiative, Bata is also considering the possibility of reducing outgo under the royalty payment arrangement that it has with Bata of Canada.
"We are looking at all possible financial initiatives that would help us source additional funds but without substantial addition to the financial burden. Bata is also looking at the possibility of generating a portion of the fund required for restructuring from internal sources," said P M Sinha, chairman, at the sidelines of the 71st annual general meeting here on Thursday.
"Restructuring would also involve closing down all of its cash drain stores in phases," he added.
Sinha told shareholders that the Bata's township development initiative, as a joint venture with Calcutta Metropolitan group, was expected to be commissioned in November this year.
Shareholders on Thursday passed a resolution related to the financial restructuring package, allowing the company to raise further funds, which could exceed the aggregate paid-up capital of the company.
It also passed a resolution, which enabled the management to borrow through term loans and corporate loans by mortgaging properties of Rs 60 crore (Rs 600 million).
Meanwhile, officials said the merger of the subsidiaries would be beneficial. CCEL's accumulated losses at the end of the financial year was more than 50 per cent of its net worth.
Bata Properties declared a Rs 3 crore (Rs 30 million) net profit in 2003 mainly through sale of flats handed over in the last fiscal.
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