Royal Footwear pulls out of public offer amid business uncertainty
Royal Footwear Limited, a footwear manufacturer and exporter, has abandoned its plan to raise Tk12 crore on the Dhaka Stock Exchange's SME Platform.
The company had intended to use the funds to expand its business and meet growing demand in its export markets.
It recently informed the Bangladesh Securities and Exchange Commission (BSEC) about its decision to withdraw the QIO (qualified investor offer) application.
A BSEC official told TBS that the company withdrew the application because of political uncertainty, the ongoing economic crisis and instability and generally unfavourable conditions for business expansion.
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Sources from the stock exchange said the Dhaka Stock Exchange (DSE) issued a negative opinion on Royal Footwear during its board of directors' meeting.
Earlier, in the October-December quarter of 2024, the company filed with the BSEC to issue 1.2 crore shares through the fixed price method.
Royal Footwear, a synthetic shoe manufacturer, intended to use the IQIO funds for business expansion, working capital and loan repayment. The planned allocation included Tk1.30 crore for land acquisition, Tk3.12 crore for building construction, Tk3.72 crore for machinery purchase, Tk3.50 crore for loan repayment, and Tk0.36 crore for IQIO-related expenses.
Md Anwar Hossain, the company secretary of Royal Footwear, earlier said that the company, established in 2014, intended to enter the capital market to expand its business and enhance compliance standards.
He noted that some buyers specifically requested the company to list on the capital market, believing it would improve compliance and integration with international standards.
In FY24, Royal Footwear reported a revenue of Tk112.32 crore, up from Tk59.54 crore in the previous fiscal year. Its profit after tax was Tk6.71 crore, significantly higher than Tk2.36 crore the previous year. Earnings per share (EPS) were Tk2.34, while the net asset value (NAV) per share, after revaluation, was Tk25.07.
According to the company's prospectus, Bangladesh's footwear industry is growing rapidly due to increasing domestic and international demand, competitive production costs, and favourable government policies.
Opportunities exist in export expansion, modern technologies, and sustainability, it states. However, challenges like quality control, compliance with international standards, and workforce development remain, says the company.
Major competitors of Royal Footwear include Apex Footwear, Bata, Bay Emporium, Lotto BD, Jenny's Shoes, Craftsman Footwear and MK Footwear PLC.
To stay competitive, companies are adopting advanced technologies and automated machinery, while also obtaining global certifications such as the Leather Working Group certification.
Despite challenges like limited access to finance, infrastructure gaps, and labour shortages, the industry is making progress in environmental sustainability through eco-friendly production practices and effluent treatment investments.
