Royal Footwear Limited – a footwear manufacturer and exporter – plans to raise Taka 12 crore from the SME Capital Market Platform to expand its business and meet the growing export demand.

The company has filed an application with the Bangladesh Securities and Exchange Commission (BSEC) to issue 1.2 crore shares through the fixed price method through an Initial Qualified Investor Offering (IQIO).

As a synthetic footwear manufacturer, Royal Footwear intends to use the funds for business expansion, working capital and loan repayment.

Specifically, the allocation includes Tk 1.30 crore for land purchase, Tk 3.12 crore for construction of buildings, Tk 3.72 crore for purchase of machinery, Tk 3.50 crore for Tk for loan repayment and Tk 0.36 crore for IQIO expenses.

Md Anwar Hossain, company secretary of Royal Footwear, told The Business Standard that the company, incorporated in 2014, is considering entering the capital market to expand its business and improve compliance standards.

He added that some buyers specifically asked the company to list in the capital market, believing that this would improve compliance and integration with international standards.

“We mainly export to European and Asian markets, where demand for our products is steadily increasing,” he said. “Furthermore, management prefers the capital market as a more sustainable option for long-term business growth rather than relying on bank borrowings.”

Connection with Al-Madina Pharmaceuticals

Royal Footwear shares some common directors with Al-Madina Pharmaceuticals, a company listed on the SME platform. In February 2023, Al-Madina raised Tk 5 crore through the SME platform for business expansion.

In FY24, the pharmaceutical company declared a 12% cash dividend exclusively for general shareholders, excluding sponsor directors.

Financial performance

In FY24, Royal Footwear Limited reported a turnover of Tk 112.32 crore, compared to Tk 59.54 crore in the previous financial year. Its profit after tax stood at Tk 6.71 crore, significantly higher than Tk 2.36 crore a year ago.

Earnings per share (EPS) reached Tk 2.34, while net asset value (NAV) per share, after revaluation, was Tk 25.07.

Prime Bank Investment Limited acts as issue manager for IQIO.

Industry Overview

According to the company’s prospectus, the footwear industry in Bangladesh is growing rapidly due to increasing domestic and international demand, competitive production costs and favorable government policies.

Opportunities lie in export expansion, modern technologies and sustainable practices. However, challenges such as quality control, meeting international standards and workforce development persist.

Royal Footwear’s main competitors include Apex Footwear, Bata Shoe Company (Bangladesh), Bay Emporium, Lotto BD, Jenny’s Shoes, Craftsman Footwear and Accessories and MK Footwear PLC.

To stay competitive, companies are adopting advanced technologies such as CAD/CAM systems and automated machines to improve efficiency and quality. Many companies also obtain global certifications, such as Leather Working Group (LWG) certification, to boost their credibility.

Despite obstacles such as limited access to financing, infrastructure gaps and labor shortages, the industry is making progress on environmental sustainability.

Investments in eco-friendly production methods and effluent treatment plants help address environmental concerns and align with international standards, thereby enhancing the industry’s growth potential.