High Court approval steps up BSRM’s merger plan

The Bangladesh Steel Re-Rolling Mills Ltd (BSRM) and its subsidiary BSRM Steel Mill Ltd are now set to merge as the High Court has approved the company's merger proposal.  

Shekhor Ranjan Kor, company secretary of BSRM Ltd told The Business Standard that they will now take the opinion of the company's shareholders to implement the merger. 

The board of directors of the company held a meeting on this issue on Tuesday to fix a time and place for holding a special general meeting to get a nod from shareholders on the merger.

The board has decided to hold the special general meeting in Chattogram on December 19. 

BSRM Ltd is a stock market-listed company while BSRM Steel Mills is not. 

The merger will help cut costs by reducing corporate taxes. Non-listed companies have to pay 35% corporate tax while listed firms have to pay only 25%.

Currently, BSRM's paid-up capital is Tk395 crore. It owns 44.97 percent shares of BSRM Steel Mill Ltd, while the remaining 55.03 percent shares are owned by other shareholders. 

A valuer will be appointed to determine the price of 55.03 percent shares that the mother company will acquire, the company sources said.

Once the merger is complete, BSRM Steel Mill Ltd will not remain as a non-listed company anymore, the company secretary said. 

"The shares of BSRM Steel Mill Ltd will then be blocked for three years," he added. 

BSRM Steel Mill Ltd produces billet, a raw material for manufacturing rods. The company went into commercial production in 2016, and in the next two years it suffered a loss of Tk98 crore. 

However, in the 2018-19 fiscal year, BSRM Steel Mill made a net profit of Tk94 crore. Currently, the company produces 860,000 metric tonnes of billet per year. 

The paid up capital of BSRM Ltd, which produces mild steel rods, is Tk236 crore. The company has declared 25 percent cash dividends to the shareholders for the 2018-19 fiscal year. The company's earnings per share (EPS) stood at Tk7.88 during this fiscal year.

The company will also hold its annual general meeting in Chattogram on December 19. 

Two other firms of the BSRM Group, namely BSRM Steel Ltd and BSRM Iron and Steel Company Ltd, were merged in 2017. BSRM Steel Ltd was listed in the capital market while the other firm was not. 

BSRM Ltd holds 31.19 percent share of BSRM Steel Ltd. Most of the rods produced by BSRM Steel are exported, mainly to seven Indian states bordering Bangladesh. 

BSRM Steel's board of directors recommended disbursing 25 percent cash dividends to its shareholders for the 2018-19 fiscal year. During this period, the company's EPS stood at Tk4.60.