THOUGH operating as quietly as a private company, Singer Pakistan Limited came into the public glare on Jan 21 this year when its parent based in Amsterdam, the Netherlands — that held the majority stake in the company — announced that it was selling its entire holding.

The company explained in a filing on the stock exchange that its divestment was a policy decision of Singer Asia Limited, indicating its departure was not Pakistan-specific.

The company did not disclose the sale price per share, but its divestment was spectacular. Instead of calling bids for the sell-off to a single buyer, it decided to disperse the 31m shares it held, representing 70.28pc holding in Singer Pakistan Ltd to 13 different investors in various independent tranches.

The sale to each of the individual range between 1.1pc of the total offered block on sale to 18.74pc. The company pointed out that the maximum shareholding acquired by any single investor/investor group did not exceed 29.95pc. But why the majority shareholder did not seek a single strategic buyer would remain a mystery.

Instead of calling bids for the sell-off to a single buyer, it decided to disperse the 31m shares it held to 13 different investors in various independent tranches

Singer is engaged in retailing and trading of domestic consumer appliances and other light engineering products. Those include sewing and washing washing machines, generators, gas appliances, cooling products, audio and video products and even motorcycles.

A company official says that Singer has been operating in the sub-continent since 1877. “Today Singer Pakistan has the largest retail network in South Asia with over 750 stores”, he claims.

Going by the last reported total assets on the balance sheet for the nine months ended Sept 30, 2015, Singer Pakistan was worth Rs3bn. The company was listed at the stock exchanges in 1985.

The price of the Singer stock closed on Thursday at Rs24.50, which puts the company’s market capitalisation at Rs1.11bn.

According to the company, out of the total outstanding shares of 45m on Dec 31, 2015,, the free float stood at 12.4m shares, not including 0.54m shares held by directors/ sponsors; 31.9m shares held by associated companies (cross holdings) and 0.536m shares held by the general public in physical form.

The paid-up capital of Singer Pakistan was Rs454.1m in shares of Rs10 each. Although the balance sheet carried revenue reserves of Rs117.9m at Sept 30, 2015, the accumulated losses amounting to Rs283.7m wiped it all off. The company, however, had Rs593m in the form of ‘surplus’ on revaluation of assets (land and building).

The company CEO Mahmood Ahmed stated in the directors’ report for the nine months ended Sept 30, 2015 that the business environment was challenging due to tough competition in the consumer appliances market and the continuous turnover of field sales force.

In that period, the company suffered loss after tax of Rs61.22m, which stood down from loss of Rs98.86m in the corresponding period of the previous year. Sales increased to Rs1,251.49m, from Rs1,317.23m.

There was all round reduction in costs which travelled down to the bottomline. Marketing,selling and distribution expenses were down to Rs218.69m from Rs230.71m year-on-year (YoY).

But the real benefit stemmed from the steep drop in other operating expenses to Rs20.54m, from Rs100.58m which the CEO said was ‘due to lower provisions for doubtful debts’.

In the third-quarter (July-Sept 2015), the company posted loss of Rs22.52m, down from loss of Rs38.40m. YoY sales increased to Rs399.81m, from Rs377.20m.

Marketing, selling and distribution expenses in the third quarter decreased to Rs74.19m from Rs77.70m. Administrative expenses declined to Rs12.34m, from Rs13.66m. Other operating expenses in the third quarter dropped to Rs6.01m, from Rs23.85m which the CEO said was ‘due to reduction in provision taken for doubtful debts against trade debts and other receivables’. Another big blessing was the reduction in finance cost to Rs35.80m, from Rs50.74m YoY which was attributed to reduced borrowings and Kibor.

The company would hold the next general meeting possibly in April 2016 after the release of audited accounts and reports for the year ended Dec 31, 2015. The shareholders would surely discuss the financial figures and the management’s outlook for the future.

They would be anxious to know if the company would be able to skip out of the red in the near future. Even if the company were to turn the corner, it is likely to be years before the management is able to wipe off the red from the balance sheet and resume payment of dividend to the shareholders.

Published in Dawn, Business & Finance weekly, February 8th, 2016