KARACHI, Sept 2: The majority shareholding in Star Textile Mills Limited has passed from the Dadabhoy group to Matell Limited — a company incorporated in the British Virgin Islands.

Following a meeting of the board on August 29, the office of chairman, CEO and five directors were vacated by the Dadabhoy group, to make way for the nominees of the offshore acquirer.

“Matell Limited is an associated company of the S&I Group, which holds 39th place on the Fortune 500 list,” Muhammad Iqbal, a senior executive at Star Textile Mills told Dawn on Tuesday. He said that Matell had acquired 4.3 million shares in Star Textile, which measured up to 79 per cent of the total shares outstanding. The purchase consideration had been agreed at Rs 50 per share.

Mr. Iqbal said that through a public announcement made on July 28, under section 5(1) of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, Star Textile had offered to buy back minority shareholders’ stake also at the same price; the offer stands valid for sixty days till September 28. But with another 17 per cent shares vested in local directors on the board, public holding would barely make up the rest of four per cent.

Star Textile Mills Limited which celebrated its 50th year last December, has lost its twinkle of the seventies. At the close of three-quarters ended June 30, 2003, the company was carrying accumulated deficit of Rs58 million on its balance sheet. This slightly exceeded its paid-up capital of Rs55 million. The company had disbursed the last cash dividend at 10 per cent for 1992, while the last payout was bonus shares at 5 per cent distributed for 1997. The share in Star Textile had touched its highest at Rs62.25 in 1991, but was since languishing at under Rs20 a piece. With speculation running high this year, the stock shot up from Rs18 on January 1 to Rs58, currently.

A staff at the company office said that the new management had extended assurance to the workers’ unions that there would be no job cuts and retrenchments. Mr. Iqbal claimed that the overseas investor was planning to launch BMR since the plant was half a century old. He stated that the spinning arm of this composite textile mill, would be the first to go into balancing and modernization. Total assets of Star Textile Mills Limited at the book value on June 30, 2003 stood at Rs228 million.

For the three-quarters ended June 30, 2003, the company posted gross profit at Rs0.6 million and operating loss of Rs8 million, compared with gross profit of Rs7.1 million and operating profit at Rs0.7 million in the corresponding period of the previous year. Financial charges which stood at the tall order of Rs14.6 million would have made results worst, but the company booked gains on sale of immovable property amounting to Rs21 million. That helped show a smaller pretax loss of Rs0.6 million for the latest nine months, compared with loss of Rs15.7 million in the same time a year ago.