How
Samin Textiles became Waves Home Appliances Pakistani corporations are looking for alternatives to Initial Public Offerings
F
By Saad Tanvir
rom a textile manufacturer to a home appliances distributor. Waves has managed to convert a dormant, going concern, listed company into an active home appliances distributor and is eyeing to mold it into a large-scale retail organization with its own home appliances manufacturing unit. As per a recent notification posted on the PSX, Waves Singer Pakistan has demerged its home appliances manufacturing division and merged it into Samin Textile, which would now be renamed to Waves home appliances. The notification presented that the principal line of business would be changed to include manufacturing & assembly, alongside wholesale of home appliances & other light engineering products. Samin textiles, a quiescent listed company on the PSX, had caught the attention of a large conglomerate - Waves Singer Pakistan Limited. Mr. Haroon Ahmed, the CEO and majority shareholder at Waves singer Pakistan, had increasingly shown interest in the acquisition
CORPORATE
of the bleeding Samin textile at the beginning of last year. He managed to present a revival plan for its transformation and successfully went on to acquire the textile company. The Sale Purchase Agreement was originally signed in January 2021 between the sponsors and Mr. Haroon, constituting a consideration of Rs. 25 million against 67.1% ownership of the company. There, Haroon saw an opportunity to carve out a separate business segment for his expanding company, Waves Singer. The business of Waves was to be transferred to Samin, which included its manufacturing and retail business, while waves itself would venture into the real estate business. A great strategy, but why pay Rs. 25 million for it? Why not just create a privately listed entity? or a listed one for that matter. Why did waves acquire an already listed company with essentially no real balance sheet? No assets, only liabilities. Since Waves had planned to completely restructure a textiles manufacturing and distribution company into a home appliances business, were its dealership network, brand name, customer base, or supply chain of any use? Other than it’s Tangible assets – which Waves had not acquired, what benefit could Samin textiles yield for waves? There was
seemingly no synergy at all.
A bit about Samin Textiles
S
amin Textiles Limited (SMTM) was incorporated in Pakistan in November 1989 and was listed on the PSX in 1994. The principal business of the company used to be manufacturing and sale of textile products. The company had its registered office at Main Gulberg, Lahore, while the plant used to be situated at Manga Raiwind Road, Kasur. Historically, the company had been afloat for quite some time, but the last 10 years proved to be fatal for its survival. It experienced its first blow in 2012 when its sales declined drastically from Rs. 3,096 million in 2011 to Rs. 2,435 million in 2012. The company then managed to keep them stable around the Rs. 2,500 million mark for the next 2 years, but in 2015 eventually witnessed a decay in its sales which continued to haunt it, until its ultimate shut-down in 2018. The company had experienced substantial losses during its last couple of years, including a loss of Rs. 283 million in 2017, and a colossal Rs. 898 million in 2018.
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