Lotto inaugurates new factory to nearly triple production capacity

Infograph: TBS

Express Leather Products Limited (Lotto Bangladesh), the manufacturing and marketing licensee of Italian Lotto sportswear and English Lee Cooper shoes, inaugurated its new factory in Kapasia, Gazipur, yesterday.

The Tk100 crore project, to be fully operable in two years, will increase the company's footwear production capacity to 2.7 times, its managing director Kazi Jamil Islam told The Business Standard.

He said the investment will help the company offset the surge in cost of imports in the recent years, make products affordable and grow faster as a late entrant in the outpacing branded footwear market of Bangladesh.

"Dollar price hike made imports too expensive and more local value addition through global standard of manufacturing is the solution we are preferring," Jamil Islam said.

A pair of shoes are subject to nearly 130% duties if imported in finished form, which comes down to around 85% if imported semi-finished in completely knocked down form for local assembling.

On the other hand, full-fledged manufacturing costs only 35% duty on imported raw materials, according to the entrepreneur.

"With a double digit growth, the market for brands is outpacing the overall footwear market as more people are looking for reliable, fashionable products as well as a wish to buy International brands," he said.  

Branded footwear's share in the overall $2 billion home market for closed shoes and the popular open shoes called sandals is estimated to be at 20%-25% now, up from around 10%-12% two decades ago.

Through 220 Lotto outlets and over a thousand distributors the company is earning an annual revenue of over Tk300 crore now, which is aimed at Tk800 crore in five years.

Tk15 lakh initial investment 

In 2007, former Bata executive Jamil Islam began manufacturing shoes in Tongi with just 35 workers.

With limited capital, he initially bought second-hand, low-budget machines and repaired them to make them operational. His starting investment was only Tk15 lakh.

Until 2011, he relied on outsourced orders from leading local brands. That year, his company became a licensee of Lotto, followed by a partnership with Lee Cooper in 2019.

He reinvested all profits to purchase new machines almost every month. The original 10,000 square foot factory on rented land in Tongi has now expanded to 90,000 square feet.

The factory has a monthly production capacity of 8 lakh pairs of footwear and around 50,000 units of sports apparel and accessories.

Within two years, the company plans to fully shift operations to a new factory on a 23-bigha rural plot in Kapasia. This site will house both new state-of-the-art machines and the original ones, creating over a thousand new jobs – preferably for local women.

The new factory yesterday went into partial production with a new line to manufacture lightweight water-resistant footwear with an annual capacity of one million pairs. 

"We're strongly focused on sustainability by keeping the factory green and supporting our workers and the local community," said Jamil, sharing his plans to provide residential facilities, healthcare, and education for workers' children.

"Affordability and quality always matter to me. Both affluent and middle-class customers appreciate our sports shoes for their comfort and durability," said the managing director.

According to Jamil, half of the Lotto shoes sold are sneakers, a segment where the company leads the branded sports shoe market.

In addition to offering stylish Lee Cooper shoes, accessories, and jeans, the company is also building its own in-house brand, "The Express."

At the inauguration of the new factory, Jamil thanked his bankers and foreign technology partners for their support in helping Lotto expand to the upazila level.

With the positive experience in some test export consignments, Express Leather Products Limited now eyes the export market too, especially to the other Lotto licensees in over 110 countries.