RD Food enters fruit, carbonated drink markets

Rangpur Dairy & Food Products Limited (RD Food) has entered the fruit drinks market under the "Aora" brand and will also launch a carbonated beverage, "Fighter", as part of its business diversification.

The company has been producing and selling ultra-high-temperature (UHT) processed milk and flavoured milk under the RD brand.

At present, it will produce the fruit drink by outsourcing production. To meet market demand, the company has already opened a Tk7 crore letter of credit to buy machineries for increasing its juice production. 

The company will install the machines at its existing factory premises located in Rangpur.

Speaking at the launching programme yesterday, MA Kabir, managing director of RD Food, said, "We are the first company which purified milk by using UHT technology. People know us as a quality milk producer. By using this image, we have now entered the fruit drink and carbonated beverage market."

He further added that the fruit drink and the flavoured milk will be sold under two different brands as part of the company's marketing strategy.

"Because we already have distributors in different districts, by launching a new brand, we can make more distribution contracts with different businessmen," he said.

At the beginning of this year, the company received $1.10 million worth of export orders of flavoured milk and mango juice from several countries.

Most of the orders have come from Burkina Faso, UAE, Ghana, Mali, Republic of Moldova and Yemen. 

RD Food already exports to India, Bhutan and in some African countries under its own brand name.

The company got listed at the stock exchange in 2011 and is being traded under the "B" category.

The "B" category means that the company failed to declare a minimum dividend of 10%, which is required to reach the "A" category.

RD Food's share prices jumped by 376% to Tk56.60 in the last year despite pandemic shock.

In this regard, Kabir said that they had disclosed price sensitive information as per securities law, but this may have been leaked before being published, thus manipulating the share price. 

At the end of the 27 September trading session, its share price closed at Tk54.70 at the Dhaka Stock Exchange.

Due to pandemic induced slowdowns for businesses in the last 2019-2020 fiscal, RD Food's profit dropped by 44%, although its revenue was similar to that of the previous year.

In FY20, the company's revenue was Tk61.09 crore, and its after-tax net profit stood at Tk2.21 crore, which were Tk60.75 crore and Tk3.17 crore, respectively, in the previous year.

As profit decreased, shareholders received a 4% dividend -- 2% cash and 2% stock -- for the last fiscal year, during which the company paid a 5% stock dividend.

In its annual report, the company put down its profit fall to a gradual increase in the cost of raw milk, which increased by 20-25% over the year. This resulted in a fall in profits, despite positive growth in revenue. 

Even though the pandemic is going on, RD Food's revenue increased in the July-March period of FY21. In this period, the company's total revenue stood at Tk50 crore, up from Tk46 crore compared to the same time in the last fiscal year.

The company made a profit of Tk3.85 crore and its earnings per share stood at Tk0.52 during this time.