Rahima Food set to make comeback in business

Highlights

• Production closed since 2013
• 37.38% company share owned by City Group
• New coconut oil plant in the making
• Production likely next March-April
• Marico leads hair oil industry

Rahima Food Corporation Ltd is likely to resume business operations seven years after it halted food production.

City Group, a leading conglomerate and consumer goods manufacturer in Bangladesh, is helping the corporation to make a comeback in business, acquiring a 37.38% share of Rahima's sponsors and directors.

Rahima Food remains closed since 2013 due to scanty marketability of its products, and was delisted from Dhaka Stock Exchange and suspended from trading of shares in Chittagong Stock Exchange since July 2018.

The company used to produce edible oil and vegetable ghee in its own refinery.

According to an official of the corporation, in December 2017, the board of the company was reformed by the City Group. The new management decided to set up a coconut oil producing plant.

The official said the company has restructured its factory made of steel at a cost of Tk5.47 crore.

Shahidur Rahman, chief financial officer of Rahima Food Corporation Ltd, said: "We have already opened LC (Letter of Credit) on 23 August this year for the import of machinery from China. We hope it will be possible within this year."

To operate the factory, the management has already set up gas and electricity connections, updated trade licence, TIN and BIN certificates and other necessary documents.

"If we get the machinery within December, it will be possible to start production in March-April of 2021," he added.  

Claiming that the company has no shortage of working capital, the top executive said City Group will provide support to manage all activities of Rahima Food Corporation.

Rahima's share trading remains suspended in Chittagong Stock Exchange since July 2018, which will start very soon. The last trading price of the company share was Tk175.40 per share at CSE.

Bangladesh Securities and Exchange Commission (BSEC) has issued a directive to the CSE for withdrawal of its suspension order immediately and submission of the overall trading report of the company within three working days.

CSE source said some requirements have to be fulfilled by the company for its resumption of trading any time.

The commission also sought an explanation along with a recommendation within three working days from the Dhaka Stock Exchange (DSE) for what basis Rahima Food Corporation was delisted.

The commission has also asked the DSE as to whether the latter carried out its due role in protecting the interest of investors in compliance with the necessary regulatory provisions before delisting.

Besides, it inquired the stock exchange whether the latter has taken any action against the issuer company and its directors for their non-compliance, if any, as per the laws.

The principal activities of the company had been to deal in the business of refined edible oil and vegetable ghee produced in its own refinery till June 2013.

Due to scanty marketability of its products it had to suspend production. At the end of 2017, the management of the company decided to change the nature of its business. 

It decided to set a coconut oil producing plant, which is yet to be ready for production.

The management is trying to complete the plant within the shortest possible time. 

Rahima Food was incorporated in 1990 and listed in stock exchanges in 1997, but the DSE delisted it in July 2018.

According to the audited financial report ended 30 June this year, the company's loss per share was Tk1.20 and its net asset value per share was Tk9.57.

The company management did not recommend any dividend for its shareholders for the year ended 2020.

Rahima's paid-up capital is Tk20 crore. Sponsors and directors hold 37.38%, institutions 20.67%, foreign investors 4.99% and general investors 36.96% of the company.

The listed company -- Marico Bangladesh -- is the market leader with 80% market share of the hair oil industry. Besides, foreign brands Dabur and Emami also dominate the market.

According to the market insiders, the domestic market size stood at $41.3 million in 2019 and is expected to grow by 5.5% to $54 million till 2025.