The board of directors of publicly-listed Singer Bangladesh Ltd has decided to hold an extraordinary general meeting (EGM) regarding the merger with its non-listed subsidiary company - International Appliances Ltd.
The EGM will be held on November 26, 2020 through a digital platform in order to secure approval from the shareholders of Singer Bangladesh. The record date is set for October 22, stated the company disclosure on the Dhaka Stock Exchange (DSE) website on Thursday.
Singer Bangladesh holds 100% shares of International Appliances. The former's paid up capital is Tk99.7 crore.
An official of Singer Bangladesh told The Business Standard that International Appliances is wholly owned by Singer. Therefore, Singer will not have to issue any new shares for the merger. That's why Singer's paid-up capital will not increase after the merger.
"The merger will help reduce corporate taxes as non-listed companies must pay a 32.5% corporate tax, whereas listed ones only have to pay 25%," he added.
"After the merger, intra-company transactions and subsidiary company's paid-up capital will be removed from the consolidated balance sheet," he continued.
International Appliances was incorporated as a private limited company on December 23, 2014. Singer Bangladesh acquired it as a subsidiary on October 16, 2017.
The paid-up capital of International Appliances is Tk38.89 crore.
The subsidiary company manufactures and sells refrigerators of different capacities, models and types under the Singer brand name.
Its manufacturing plant is situated in Savar. Currently, its refrigerator production capacity is 1.32 lakh units per year. However, it produced over its capacity last year.
The revenue of International Appliances increased 19% to Tk255.3 crore in the last year as compared to the previous year. However, it posted net losses for the last two years.
Meanwhile, Singer Bangladesh posted a 41% drop in sales in the second quarter of this year due to the countrywide 66-day general holidays declared to curb the novel coronavirus outbreak.
The company earned revenue of Tk299.49 crore in the April-June period this year, down from Tk516.76 crore at the same period in the previous year.
Its net profit also dropped by 80% to Tk7.89 crore and its earnings per share stood at Tk0.79.
Last year, Singer reached a milestone in home appliance sales with a turnover of Tk1,500 crore. The company had paid a 77% cash dividend to its shareholders.
Singer Bangladesh was listed with the DSE in 1983.
The company only sold sewing machines till 1985. Later, it included electronics and home appliances in its business.
Singer Bangladesh used to import 90% of its products and manufacture only 10% of them a decade ago. Now, the company locally manufactures 62%, reducing its percentage of exports.
The closing price of each share of the company stood at Tk169.80 on Thursday at the DSE.
Of the company's total shares: sponsors and directors jointly hold 57%, institutional investors have 18.76%, foreign investors have 5.66%, and general investors own 18.58% of shares.