Royal Footwear files to go public

Royal Footwear Limited – a footwear manufacturer and exporter – plans to raise Tk12 crore from the capital market's SME platform to expand its business and meet growing export demand.  

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

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

Specifically, the allocation includes, Tk1.30 crore for purchasing land, Tk3.12 crore for building construction, Tk3.72 crore for purchasing machinery, Tk3.50 crore 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, plans to enter the capital market to expand its business and improve compliance standards.  

He said some buyers have specifically requested the company to list in the capital market, as they believe this would enhance compliance and integration with international standards.  

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

Connection with Al-Madina Pharmaceuticals  

Royal Footwear shares some common directors with Al-Madina Pharmaceuticals, a publicly listed firm on the SME platform. In February 2023, Al-Madina raised Tk5 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 revenue of Tk112.32 crore, up from Tk59.54 crore in the previous fiscal year. Its profit after tax stood at Tk6.71 crore, significantly higher than Tk2.36 crore a year ago. 

Earnings per share (EPS) reached Tk2.34, while the net asset value (NAV) per share, after revaluation, was Tk 25.07.  

Prime Bank Investment Limited is acting as the issue manager for the IQIO.  

Industry overview  

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

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

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

To remain competitive, companies are adopting advanced technologies such as CAD/CAM systems and automated machinery to enhance efficiency and quality. Many firms are also obtaining global certifications, such as the Leather Working Group (LWG) certification, to boost credibility.  

Despite obstacles like limited access to finance, infrastructure gaps, and labour shortages, the industry is making strides in environmental sustainability. 

Investments in eco-friendly production methods and effluent treatment plants are helping to address environmental concerns and align with international standards, further strengthening the industry's growth potential.