Intraco to merge with subsidiaries to cut down tax burden

Intraco Refueling Station has reached an advanced stage for merger with its three subsidiaries in a bid to lessen tax burden.
The boards of Intraco and the subsidiaries -- M. HYE & Co. CNG Refueling Station Limited, Nessa & sons Limited, and Good CNG Re-Fueling Station Limited - decided in favour of the amalgamation considering the corporate tax gap between listed and non-listed companies.
A non-listed company has to pay 27 per cent corporate tax, while its listed counterpart pays 20 per cent. The amalgamation between the parent company and the subsidiaries would ease the tax burden of the parent company.
The second reason behind the merger is to avoid double taxation on dividends realised from the subsidiaries.
Intraco has to pay tax at a rate of 20 per cent at the time of receiving dividends from the three subsidiaries. Again, the company pays tax against the same dividends when the fund is included in its own financial statement.
It is a matter of double taxation for the parent company.
"The company has taken the decision [relating to amalgamation] mainly to reduce the tax burden," said company secretary of Intraco Refueling Station G.M Salahuddin.
The overhead costs of the subsidiaries will also come down after the merger, and it will help boost the profits of Intraco, he added.
On the possible dilution of existing shares of Intraco, the company secretary said such an impact would not be significantly high, as the parent company had 95 per cent stake in the subsidiaries.
The shareholders of the remaining 5 per cent of the subsidiaries will get 338,486 new shares in total, increasing the outstanding shares of Intraco to nearly 98.57 million from 98.23 million at present.
The amalgamation is subject to the approval of shareholders, the securities regulator, creditors and the High Court.
In May, Intraco Refueling Station inked a deal with state-run Sundarban Gas Company for a period of 10 years.
Under the agreement, the company is supposed to get gas produced by Sundarban Gas Company in Bhola, which will be compressed for distribution to industrial areas.
The company expected that its profit would be enhanced through the new avenue of business.
Its share price experienced an upward trend between February and May. The stock peaked at Tk 52.40 on June 5 from Tk 29.40 on February 20.
The share price then declined to Tk 34.70 on August 16 and closed at Tk 41.30 on Monday.
The company maintained a consistency in its profit growth over the last three fiscal years.
It bagged a net profit of Tk 47.43 million in FY20, which rose more than 54 per cent year-on-year in FY21. The profit continued to grow at a rate of 38.5 per cent to Tk 101.61 million in FY22, compared to the previous fiscal year.
The company also reported a hefty 85 per cent growth in consolidated earnings per share (EPS) to Tk 1.35 for July-March of FY23, compared to the same period a year ago.

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