Failing at exporting, Legacy Footwear eyes local market

Failing to create a hold in the export business, Legacy Footwear now wants to enter the local market by extending its plant and for this, the company seeks funds from investors.

The export-oriented footwear manufacturer has already sought approval from the Bangladesh Securities and Exchange Commission (BSEC) to increase its paid-up capital by Tk30 crore through issuing a convertible bond.

"We want to start our footwear business in the local market. This requires further investment. So we have applied to the regulator for raising funds from the capital market," Quazi Rafi Ahmad, managing director of Legacy Footwear, told The Business Standard.

A senior BSEC official, seeking anonymity, said the company has not been doing well for more than a decade and for that the commission wanted to know its plans to improve the business.

"They want to do footwear business in the local market. But it is not possible for them to expand the factory with a bank loan," he said.

He said the commission has instructions to increase the paid-up capital of small cap companies. Since the paid-up capital of this company is Tk13 crore, it was advised to raise funds to increase  capital.

He said the company wants to raise capital without issuing the right shares. The commission, therefore, advised it to apply for a convertible bond.

At the end of the bond's tenure, it will be converted into shares and added to the paid-up capital, he said.

The company mentions in its application that it initially wants to start a business on a small scale in the local market. To that end, it will produce synthetic leather shoes.

It has already applied to the government for selling footwear in the local market. In the first year of starting business, the company has set a sales target of Tk30 crore.  

Legacy Footwear started its footwear business in 1996 as a 100% export-oriented company but it could not establish itself in the export market.

Instead, due to low export orders, its factory produces footwear for three to four months a year. A team from the Dhaka Stock Exchange (DSE) found the factory of the company closed during an inspection.

The company also mentioned in its annual financial report that the cost of exporting shoes has increased. Again, the demand for leather footwear has dropped drastically in European and American markets as have orders.

Companies like Apex Footwear have also focused on the local market alongside their export business. They are doing good business locally as well.

Quazi Rafi Ahmad, the managing director of Legacy Footwear, said, "Our local footwear market is very big and a large part of it is held by non-branded companies."

"If we provide quality products at affordable prices, then it will not take long to capture this market," he added.

 Quazi said the work of designing shoes has already been completed to supply products in the local market.

"Now we will start work as soon as we get the funds," he added.

The company got listed on the capital market in 2000. Its shares traded at Tk64.50 each on the country's premier bourse on Wednesday.