In order to raise capital, Servis Industries Limited has planned to list its wholly-owned subsidiary, Servis Global Footwear Company at the Pakistan Stock Exchange (PSX) through an Initial Public Offering (IPO).
The renowned shoe and tire brand has separated its operations and business into different units which ultimately created Servis Industries Limited (SIL) as the holding company and Servis Global Footwear Company.
Accordingly, the management of SIL and SGFL independently operate the businesses on a regular basis. This structure is aimed at effective management of the business and benefits to the stakeholders.
Servis Group Financials
SIL and its subsidiaries (including SGFL) recorded sales of Rs. 12.70 billion in its consolidated financial statements during the half-year under review as compared to Rs. 14.31 billion during the corresponding period last year showing a negative growth of 11.24%.
The profit reduced by 64.47% due to the abolishment of tax credit available under Section 65B of the Income Tax Ordinance 2001 w.e.f. 01 July 2019 (which was earlier available to the company on the amount of investment made in the purchase of plant and machinery at the rate of 10% of the amount invested). This decrease in profitability is mainly attributed to the drop in sales and due to the closure of production during the lockdowns announced by the Punjab Government from March 23, 2020, on account of the COVID-19 pandemic.
The footwear export business (including SGFL) has shown healthy performance during the half-year under review despite disruption in international markets owing to the pandemic. Furthermore, the domestic footwear market faced tough challenges as the retail market remained closed for two months during the lockdown.
The tire business showed a minor decrease of 6.93% in sales, but the markets have recovered well after the initial lockdowns. The tough market competition and an uncertain economic environment continue to prevail in the country.
The loss per share stood at Rs. 2.87 during the half-year under review in the separate financials of Service Industries Limited, whereas the earnings per share in the consolidated financial statements of Service Industries Limited and its Subsidiaries stood at Rs. 8.76 from January to July 2020.