Evince Textiles seeks merge with Evitex Fashions

Evince Textiles Ltd, a listed company in the capital market, wants to merge with its non-listed subsidiary Evitex Fashions Ltd, which exports readymade garments.

The board of directors of the Evince Textiles made the decision at a meeting held recently.

The company needs shareholders and creditors approval for implementing the merger decision, as per a High Court direction.

As per the Company Act, a company needs High Court approval regarding merger with another company.

For shareholders and creditors approval, the company also set 6 November for the extraordinary general meeting date, which will be held virtually at 12 pm. The record date is 12 October.

Besides, the creditors' meeting will be held on 6 November at the company's head office.

Evitex Fashions was incorporated on 11 April 2004 as a private company with Tk8.80 crore in paid-up capital. It started commercial operations in 2005 and its factory is located in Gazipur.

At present, the Evince Textiles holds 95% shares of its subsidiary. The remaining 5% share is owned by Chairman Anwar-Ul-Alam Chowdhury, Director Shabnam Shehnaz Chowdhury, Managing Director Abu Kawser Majumder, Directors AK Gouhor Rabbani, and Akhter Shahid of Evince Textiles.

In the last five days, the Evince Textile's share price jumped by 23% and closed at Tk13.5 at the end of 23 September trading session at the Dhaka Stock exchange.

An official of the company said the merger will help reduce management cost and corporate tax, and accounting could be easier after the merger. But the company did not disclose how many shares will be added to its existing share after the merger. 

In fiscal year 2019-20, Evitex Fashions reported Tk61.95 crore in revenue, which was slightly higher than in the previous fiscal.

But the company's net profit dropped 50% to Tk1.23 crore because of increased costs in FY20.

In the first three quarters of FY21, its revenue dropped 63% to Tk17.42 crore owing to the Covid-19 pandemic. During the period, it incurred a loss of Tk1.41 crore.

Evince Textiles got listed with the Dhaka Stock Exchange in 2016. In the listing year, it reported net profit of Tk23.82 crore and paid 10% cash and 20% stock dividends to the shareholders.

But in the fiscal year 2019-20, its net profit came down to only 3.55 crore and paid 5% stock dividends to the shareholders.

In the fiscal year 2017-18, it failed to pay any dividend to the shareholders although it reported net profit of Tk16.87 core. The company faced massive criticism of the investors for failing to pay dividends after one years of listing date. The securities regulator also called the company to explain the dividend decision.

At the end of the first three quarters of FY21, its consolidated revenue dropped 49% to Tk119 crore and incurred a loss of Tk2.48 crore.