Evince Textiles to merge with subsidiary to cut cost
The merger will help reduce management cost and corporate tax
Publicly listed Evince Textiles Limited will merge with its non-listed subsidiary company, Evitex Fashions Limited, in order to curb costs.
The company took the merger decision at their board meeting and it was revealed on the website of the Dhaka Stock Exchange (DSE) on Tuesday.
After the merger news, the share price of the company rose 5.13% to Tk8.10 each.
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An official of the company said the merger will help reduce management cost and corporate tax, and accounting could be easier after the merger.
As per the Company Act, Evince Textiles will appeal to the high court regarding the merger. The company will then hold an extraordinary general meeting, upon receiving directives from the court, in order to secure the approval of shareholders for the merger.
Evince Textiles paid a 5% stock dividend to its shareholders for the last fiscal and its earnings per share stood at Tk0.20.
The company's subsidiary, 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.
Evince Textiles owns 95% of Evitex Fashions. 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 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 this fiscal year, 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.
