CRITICAL ASSESSMENT

OF BATA'S BUSINESS
PERFORMANCE
PRELUDE
Bangladesh's burgeoning footwear industry is a robust
sector, characterized by low labor and production costs.
It manufactures diverse footwear, from casual to athletic,
and has gained recognition for its export-oriented
approach, contributing significantly to the country's
economic growth and employment opportunities. Bata
Shoe Company (Bangladesh) Limited has been a vital
contributor to the sector ever since it's inception.
 Bata, Bangladesh's leading changemaker in footwear
industry, has a strong presence across the country,

BATA with numerous retail stores offering a wide range of

footwear for all ages and occasions. Known for its
THROUGH THE YEARS commitment to quality, affordability and innovation,
Bata has revolutionized the footwear industry of
Bangladesh. However, due to some unforseen
reasons, Bata has incurred loss first loss in 59 years of
perations in Bangladesh. Witnessing a 12 percent fall
in sales in the first nine months of this year, Bata also
recorded a 61 percent drop in profit owing to deferred
tax during the period.
 Rise in Online Shopping Trend
Positive External External Factor: Increased preference for online shopping among consumers
Influencial Factors Impact: Boost in Bata's online sale
Bata's online store, batabd.com, has more than 2,000 assortments and remains
and Their Impacts open 24/7, indicating a potential growth avenue in the face of physical store

on Bata challenges.

Consumer Confidence Improving

Bata has experienced several positive
impacts from external factors. These
factors have contributed to the growth,
development and expansion of Bata in
Bangladesh. Some of the positive
external influencial factors include rise in
online shopping trend, consumer
confidence improving and government
support & initiatives.
External Factor: Gradual return of consumer confidence post-pandemic.
Impact: Potential for sales recovery
Bata noticed a rise in demand post Ramadan, and this trend is expected to
continue as consumer confidence improves.
Government Support and Initiatives
External Factor: Bata noticed a rise in demand post Ramadan, and this trend is
expected to continue as consumer confidence improves.
Impact: Potential growth and development for the footwear industry.
The government's support can help the footwear industry in Bangladesh to become
a global footwear-sourcing hub.

Negative External
Influencial Factors
and Their Impacts
on Bata
While there have been positive impacts
on Bangladesh's footwear industry due
to external factors, there have also been
negative influences that the industry has
had to contend with. Some of the
negative external influencial factors
include the Covid-19 pandemic and its
impacts on the market, illegal imports,
environmental concerns and
dependence on dealers
COVID-19 Pandemic
External Factor: Outbreak of Corona virus and countrywide lockdown
Impact: Closure of outlets during major sales seasons and loss of retail business
during major festivals
Bata had to close outlets during major sales seasons, leading to a significant
decline in sales. Major festivals, which cover 25 to 30% of the company's yearly
business, were impacted due to the lockdown.
Illegal Imports
External Factor: Flooding of the market with illegally imported shoes from China
and India.
Impact: Pressure on local producers, including Bata.
The influx of illegally imported shoes has made the footwear market challenging
for local producers.
Dependence on Dealers
External Factor: Bata's owed amount to dealers.
Impact: Shift towards retail sales under its own management.
Bata owed a significant amount to dealers, leading to a shift towards retail sales
and reducing dependence on dealers.
 Bata's
Major Business Decisions

Bata owed a significant amount (Tk 201 The shift to retail sales and discontinuation
crore) to dealers, which it was trying to of wholesale credit sales led to an

01 realize through the shift to cash sales.

However, it has only been able to realize Tk 02 immediate 12% decline in sales and 61%
drop in profit in the first nine months of
60 crore so far, with Tk 141 crore in 2019 compared to the same period in
pending dues. 2018.This had a huge impact.

Bata's share price also fell by 4.09% on the Bata's management acknowledged that

03 news of dull sales, dropping 15% over the

last 3 months. 04 the market is currently difficult due to
competition from illegally imported shoes,
adding pressure to local producers like
Bata.
Bata's Strategy to
Tackle future
obstacles
Some unforseen events has led to immediate
negative impacts on Bata's financial performance and
share price and resulted into Bata suffering from a
loss for the first time in 59 years of operations in
Bangladesh. If Bata did not close down the outlets
rather keep on running them using funds from loans,
raising capital from shareholders or lowering
dividends, then they could have recovered the losses
with bumper sales during the festive seasons once
the pandemic has ended.
 33 Crore
BDT
Profits
Bata appears to be weathering the
storm for now. Though profits declined in
the short term, Bata is still profitable
with a net profit of Tk 33 crore in the
first nine months of 2019.
335-345%
Cash Dividends
Dividend Ratio
Bata has a healthy dividend payout
ratio, distributing 335-345% cash
dividends to shareholders in 2017 and
2018. This has been a huge success for
Bata's expansion.
 Focusing on omnichannel presence through its
online store batabd.com. This allows customers to
order anytime and get free home delivery.
To return to profitability, Clearing aged inventory through bulk discounts and
Bata is taking the offers to boost sales. This helped sales increase in
following steps the first quarter of 2021.
Improving production efficiency and controlling
expenses. Bata aims to stabilize its retail business
and regain lost sales volume.
Rethinking its wholesale strategy to find a balance
between direct retail and dealer-based wholesale.
Optimizing its product mix to cater to changing
customer preferences in the post-pandemic era.
 After pandemic, Bata's revenue increased by 3.51% in 2022 as
compared to 2018, and it has been on the rise ever since.

Bata's
Similar to how it did in 2021, when BATA was still in the
recovery phase and had produced relatively less money, this
led to a 52.9% increase in gross profit in 2022. As a result,
REDEMPTION operating profit dramatically improved from 185 million BDT in
2021 to 1079 million BTD in 2022. However, compared to 2018
prior to the pandemic, operating profit is still 52.9% lower. This
can be because operational costs will have increased by 487
million BDT in 2022 compared to 2018. The number of
employees fluctuated but remained relatively stable over the
years with 1107 employees in 2022. BATA contributed
significantly to the government in 2022 of 2215 million BDT
from 1604 million BDT in 2021.
 Competitive Market
ANALYSIS
Authorized Capital
01 Data: Remained constant at 500 from
2018 to 2022.
Analysis: The authorized capital, which is
the maximum amount of capital a company
can issue to shareholders, has remained
unchanged. This suggests that the
company hasn't seen a need to increase its
potential equity base during this period.
Net Revenue
02 Data: There's a fluctuation in net revenue,
with a peak in 2019 at 15808.82 and a
significant drop in 2020 to 11810.16.
Analysis:
- The drop in 2020 can be attributed to the
global pandemic, which affected many
industries, including footwear. This aligns
with the case study mentioning the impact
of COVID-19.
- The revenue in 2022 shows a recovery
but hasn't reached the 2019 peak,
suggesting lingering effects of the
pandemic or other market challenges.
 Competitive Market
ANALYSIS
Profit Before and After Tax
03 Data: Both these metrics saw a significant
drop in 2020, with profit after tax being
almost half of the previous year.
Analysis:
- The sharp decline in 2020 profits, even
more pronounced than the drop in revenue,
suggests increased operational costs or
one-off expenses during the year.
- The case study mentions the financial
loss of the footwear industry in
Bangladesh in 2020 due to the pandemic,
which aligns with this data.
Non-Current Assets and Current Assets
04 Data: Both have been increasing over the
years, with a more pronounced growth in
non-current assets.
Analysis:
- The consistent increase in assets
indicates investment in the business,
potentially in infrastructure, machinery, or
other long-term assets.
- The growth in current assets suggests
improved liquidity or accumulation of short-
term assets like inventory, which might be a
response to the disruptions in 2020.
 Competitive Market
ANALYSIS
Shareholders' Equity Net Current Assets
05 Data: A steady increase over the years. 06 Data: Dipped into the negative in 2020 but
Analysis: recovered in subsequent years.
- The growth in equity suggests retained Analysis:
earnings being added back to the - The negative value in 2020 indicates that
company's equity base, indicating financial current liabilities exceeded current assets,
health. which could be a liquidity concern.
- However, the slower growth post-2020 - The recovery in 2021 and 2022 suggests
might be due to the reduced profits in that corrective measures were taken to improve
year. the company's short-term financial position.
 Competitive Market
ANALYSIS
Ratios
07 Data: Fluctuations across the years, with
noticeable changes in 2020 for most ratios
Analysis:
- The drop in the current and quick ratios
in 2020 indicates potential liquidity
concerns during that year.
- The interest coverage ratio remaining
relatively stable suggests the company's
ability to cover its interest expenses hasn't
been severely impacted.
Dividends and Earnings per Share
08 Data: Fluctuations in dividends, with a drop
in earnings per share in 2020.
Analysis:
- The company maintained or even
increased its dividend payout in 2020
despite reduced earnings, possibly to
maintain shareholder confidence.
- The drop in earnings per share in 2020
aligns with the overall reduced profitability
for the year.

Evaluation of
Apex's Financial
Performance
(2018-2022)
Apex, a key player in the footwear
industry in Bangladesh, has experienced
a series of financial fluctuations over the
observed period. The data from 2018 to
2022 provides insights into the
company's resilience, adaptability, and
strategic decisions in response to both
internal and external challenges.
Capital Structure
Apex's authorized capital remained constant, suggesting stability in its equity
foundation. However, a slight increase in the issued capital indicates the company's
move to raise capital, possibly to fund growth initiatives or manage operational
challenges.
Revenue & Profitability
The company's net revenue peaked in 2019 but faced a significant setback in
2020. This decline aligns with the global disruptions caused by the COVID-19
pandemic, as highlighted in the case study. The subsequent recovery, though not
to pre-pandemic levels, is commendable and indicates strategic adaptability.
Assets & Liabilities
The consistent growth in non-current and current assets suggests Apex's
investment in long-term growth and its ability to maintain liquidity. However, the dip
in net current assets in 2020 raises concerns about short-term financial health
during that year.
 Financial Ratios
Evaluation of The financial ratios provide a deeper insight into Apex's operational efficiency and

Apex's Financial market perception:

- Liquidity Ratios: The drop in the current and quick ratios in 2020 indicates
Performance potential liquidity challenges during the pandemic. However, the recovery in

(2018-2022)
subsequent years is a positive sign.
- Profitability & Market Ratios: The spike in the price earnings ratio in 2020,
despite reduced earnings, might reflect investor confidence in Apex's long-term
prospects. The reduced return on shareholders' fund in 2020 aligns with the overall
reduced profitability for the year.
- Operational Efficiency: The spike in net operating cash flow per share in 2021
suggests improved operational efficiency or cash management post the
challenging year of 2020.

Influence of External Factors

The case study provides context to the data, emphasizing the significant impact of
the global pandemic in 2020 on the footwear industry. However, the growth
trajectory of the footwear industry in Bangladesh and the potential shift of major
companies to the country could have influenced Apex's decisions to invest in
assets and potentially take on more liabilities.
 BATA'S COMPETITOR
ASSESMENT
REVENUE ANALYSIS
Bata: Experienced a significant
decline in 2020 with revenue
of Tk 5,085 million, down from
Tk 8,573 million in 2019.
Apex: Demonstrated resilience
with revenues of Tk 11,810.16
million in 2020, slightly down
from Tk 15,808.82 million in
2019. The revenue further
increased to Tk 12,974.6
million in 2022.
PROFITABILITY
Bata: Encountered a Bata: Specific data on assets
substantial loss in 2020 with a
negative profit after tax of Tk
1,324 million.
Apex: While Apex also saw a
decline in profit after tax in
2020 (Tk 63.23 million), it was
not as drastic as Bata's. The
profit for Apex rebounded to
Tk 105.31 million in 2021 and
further to Tk 138.23 million in
2022.
MARKET
ASSETS AND
PERFORMANCE AND
LIABILITIES
RATIOS
Bata: The (EPS) took a hit in
and liabilities is not provided. 2020, registering a negative
As a result, the figures are value of Tk 96.83. It
undeclared. rebounded in 2022 to Tk
29.98.
Apex: Non current assets Apex: The market value per
have been on a consistent rise share declined from 2018 (Tk
from 2018 (Tk 4,096.81 million) 360.9) to 2020 (Tk 219.3) but
to 2022 (Tk 8,232.93 million). showed recovery in 2021 (Tk
Current assets also increased 253.3) and 2022 (Tk 271.5).
from 2018 (Tk 10,256.31
million) to 2022 (Tk 12,169.31
million).
Overall
EVALUATIONS
While both companies faced revenue challenges
in 2020, Apex's revenue stream appeared more
stable. The difference could be attributed to
Bata's strategic shift from wholesale to retail,
which might have impacted its sales. Additionally,
the influx of illegally imported shoes could have
posed more competition for Bata than Apex,
given Bata's longstanding presence in the local
market. Apex's profitability seems more resilient.
Bata's significant loss in 2020 could be linked to
its outstanding dues to dealers, which affected
its financial health, combined with the challenges
of the pandemic and the shift from wholesale to
retail.
Financial
PROJECTIONS
Apex's consistent growth in assets indicates a
focus on long term growth and maintaining
liquidity. Bata's shift in focus and the associated
challenges might have impacted its ability to
invest in assets or manage liabilities effectively.
While both companies faced challenges in
market performance, Apex's market indicators
seem more stable. Bata's share price drop by 15%
in the three months leading up to October 2019
might have been a precursor to its challenges in
2020. The strategic decisions and market
positioning of the two companies could explain
the differences in their market performance.
 CONCLUSION
Bata and Apex, both significant players in the footwear
industry, faced challenges during the observed period,
especially in 2020. However, Apex's financial performance
appears more resilient and stable compared to Bata. The
external factors from the case, such as Bata's strategic shifts
and the challenges posed by illegal imports, played a crucial
role in these outcomes. Strategic decisions and adaptability
will determine the future success of both companies in the
competitive footwear market.