Delisting acts as wake-up call for Rahima Food

Rahima Food Corporation has been prompted to return to production following punitive measures taken by the stock exchanges.

Dhaka Stock Exchange (DSE) de-listed the company last July as its operations remained closed for more than three years. Chittagong Stock Exchange (CSE) suspended trading of its shares for the same reason.

The oil producer on November 11 informed that they wanted to raise paid-up capital through issuance of 2 crore rights shares at Tk 10 each, subject to the approval of the regulatory bodies.

The finance will meet expenses for the implementation of a coconut oil producing plant.

“Why was the company so late in taking such a decision?” asks Abu Ahmed, a stock market analyst, reasoning that the company does not deal with high-tech equipment.


Moreover, a lot of rumours had spread in the market regarding the company and gamblers played with the stock many times, so the DSE took the decision abiding by the law, said Ahmed, also a former chairman of economics department of the University of Dhaka.

In order to bring the company into operation, City Group in 2016 purchased all of the shares held by the company's sponsors.

On completion of ownership changing formalities, Rahima on November 2017 conveyed that they wanted to change the nature of its existing business.

The company will produce and market coconut oil instead of edible oil, thereby the existing production facilities would be demolished to get necessary space for erection of a coconut oil production plant.

“We are still searching for machinery,” said Bishwajit Saha, general manager for marketing at City Group.

He questioned how the DSE de-listed a company trying to resume operations.

KAM Majedur Rahman, managing director of the DSE, said the company remained closed for more than three years, so they took the decision abiding by listing regulations.

“Moreover, we do not see any updates in the change of the nature of business except for the announcement,” he said, adding, “If they return to the operation then they can be re-listed.”

According to Rahima's annual report of 2018, the company's net operating loss is Tk 1.23 crore but it has Tk 20.43 crore from other incomes, mostly coming from the sale of land.

The company got Tk 19.75 crore form the land sale and Tk 68.09 lakh as bank interest. Last year it got Tk 22,060 as bank interest. The shuttered company has earnings per share (EPS) of Tk 9.06 as of June 30 this year, which was Tk 0.18 in the negative the previous year.

Based on the net profit, the company decided to provide dividend this year, albeit to shareholders rather than sponsors and directors.

However, Saha said they were in a quagmire on how to provide the dividend to shareholders since the company was de-listed.

“This is not a sustainable way to pay dividend,” commented analyst Abu Ahmed.

Meanwhile the DSE managing director said there was no problem at all in distributing the dividend as the company should have records of its shareholders' bank accounts. “It is the company's responsibility to communicate with its shareholders,” he said.

M Shaifur Rahman Mazumdar, managing director of the CSE, clarified that though the company had declared the dividend, they were not going to withdraw the suspension.

“Only when they can prove that their machinery purchase was underway and give assurances on their production will we take things into consideration,” he said.
Source: https://www.thedailystar.net

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