SS Steel to invest Tk160 crore in Saleh Steel

SS Steel Limited, a company listed with the capital market, will invest around Tk160 crore in Saleh Steel Industries Limited.

The company's board of directors has decided to make an equity investment in Saleh Steel to subscribe to 99 percent of its existing equity shares worth Tk24.75 crore.

Also, SS Steel will invest Tk134 crore in Saleh Steel. Following the move, Saleh Steel will issue new shares to SS Steel.

SS Steel will finance its investment from the company and partly by taking share money deposits from directors.

SS Steel's board of directors made the decision at a time when the steel industry is having a tough time since last year. Things have turned out to be more difficult for the industry amid the pandemic outbreak.

Saleh Steel produces and sells rod and coil under its brand name and its annual production capacity is around 84,000 metric tonnes, informed SS Steel.

Saleh Steel Managing Director Md Anamul Haque Iqbal told The Business Standard: "Our board has decided to sell the company to SS Steel which is in full production now." However, he declined to give more details.

Meanwhile, Saleh Steel could not pay salary to its workers since April this year. For that, the factory workers of the company staged a protest. 

Dr Syed Serajul Huq, a pioneer industrialist, was the chairperson of Saleh Steel. He passed away on January 7 this year. 

After completion of the acquisition, SS Steel expects to increase its turnover by 100 percent or Tk500 crore yearly, which can increase the profitability of the company substantially.

For the approval of the shareholders, the company will hold an extraordinary general meeting whose venue, date and time will be notified later.

An SS Steel official, preferring anonymity, said: "We have been trying to buy a factory – that is operational – for a long time to increase steel production. And we found Saleh Steel at a low price due to the outbreak."

In the three quarters of the last financial year, the company posted 9 percent growth in revenue to Tk306.46 crore. Its net profit stood at Tk42.47 crore and earnings per share Tk1.51 at that time.

The company disbursed a 15 percent stock dividend for the year ended on June 30, 2019.

Listed in January 2019, each share of the SS Steel closed at Tk 10.90 on August 4 at the Dhaka Stock Exchange (DSE).

Its shares were traded between Tk8.60 and Tk34.10 in the last one year.

The company's paid-up capital is Tk 281.75 crore. 

Sponsor and directors had 32.33 percent stake, institutional investors 19.96 percent, and general public 47.71 percent in the company on June 30, 2020, the DSE data showed.