B Mirror Desk : In terms of revenue, the domestic company Apex Footwear beat the international company Bata Shoes in the first quarter of this year. Apex Footwear made Tk 540 crore between January and March, while Bata Shoes recorded Tk 358 crore in sales. Accordingly, Apex’s revenue was Tk 182 crore, or around 51%, higher than Bata’s.

But even with Apex’s larger sales, Bata Shoes was more profitable, making Tk 37 crore in the same time frame as opposed to Tk 9.7 lakh for Apex. As a result, Bata Shoes made Tk 36 crore more in profit than Apex despite having 51% fewer revenue. The main factors contributing to Bata’s higher profitability than Apex are lower production costs and noticeably lower bank loan interest costs.

Since both businesses are publicly traded and have separately reported their financial performance, this analysis is predicated on their January–March financial reports. A review of these reports revealed the differences in Bata and Apex’s business success and profitability.

According to the financial report, in the first three months of this year, Bata spent 195 crore taka on the production of products against a business or income of 358 crore taka. That is, 54 percent of the company’s income was spent on the production of products. And the production cost was 414 crore taka against the income of 540 crore taka of Apex by selling shoes and other goods. That is, 77 percent of the company’s income was spent on the production of products. In this comparison, it can be seen that while Bata’s production cost to earn 100 taka is 54 taka, Apex’s production cost against an income of 100 taka is 77 taka. Due to high production costs, the domestic company Apex Footwear could not make more profit than Bata despite doing good business.

According to the financial report, in the last January-March quarter, Bata’s interest expenses on bank loans were about 60 million taka. At the same time, Apex’s expenses in this sector were about 150 million taka. This interest expense also made Apex lag behind Bata in terms of profit.

When asked about the reason for lagging behind Bata in profit despite doing good business, Dilip Kazuri, Additional Managing Director (AMD) of Apex Footwear, told Media , “Our production costs are higher than Bata. That is why we are lagging behind Bata in profit despite doing more business than Bata. Bata manufactures a large part of their shoes through outsourcing. Even a large part of the employees of the showrooms across the country are outsourced.

There, our products are manufactured in our own factories. Our outlets across the country are also operated by our own employees. That is why our production costs are higher than Bata. We do not compromise on the quality of the products. In addition, the prices of the products have not increased much compared to the increase in production costs due to various reasons including the exchange rate in the recent past. That is also why our production costs are high.

At present, Apex and Bata are the leading companies in the country’s shoe market. Apex has significantly outperformed the multinational Bata in terms of market presence; however, it falls short of Bata in profitability. Bata Shoes aligns its financial year with the calendar year (January-December), while Apex follows the fiscal year (July-June).

Consequently, Apex’s most recent fiscal year was 2023-24, during which it generated revenue of Tk 1,498 crore, but its after-tax profit was only around Tk 18 crore. In comparison, Bata Shoes reported a revenue of Tk 988 crore for the year ending in 2023, achieving a profit of Tk 40 crore. A comprehensive analysis of the annual financial reports reveals that despite Apex’s higher revenue of Tk 500 crore compared to Bata, it still underperformed in profitability.

Higher production expenses are the cause of this disparity; during the fiscal year 2023–24, Apex spent 70 taka to generate 100 taka, whereas Bata only spent 54 taka to generate the same amount of income. When asked for remarks, Bata Bangladesh said that Eid helped them utilize production capacity and negotiate advantageous conditions for the acquisition of raw materials, which contributed to their great success in the first quarter of this year.

They also put numerous cost-control measures into place, which led to significant earnings during this time. With more than 281 crore taka in customs and taxes paid to the government budget in 2024, Bata Bangladesh also emphasized that it has been the leather and footwear industry’s largest taxpayer for seven years running.