Rahima Food suspends production amid supply shortages and market challenges

Rahima Food Corporation Limited has temporarily halted production at its coconut oil and cashew nut processing plants, citing weak market penetration and raw material shortages. 

The announcement comes after the Dhaka Stock Exchange (DSE) sought clarification from the company regarding its operations, following unusual movements in its share price.

In its reply filed today, the company said it had launched coconut oil production and marketing on 17 February 2022 with high expectations of profitability. However, despite operating for over three years, the product has yet to achieve the desired market penetration. 

"We view this as a valuable learning experience. To ensure long-term sustainability, we have temporarily paused production while actively exploring alternative strategies for optimizing both production and marketing," the disclosure stated. 

The company expressed confidence that with the right approach, the coconut oil project could be revitalised in the future.

Similarly, Rahima Food began its cashew nut processing and marketing venture on 31 May 2022, which initially delivered encouraging profits. Traditionally, raw materials were sourced locally during harvesting seasons, ensuring year-round production. 

But this year, unfavourable climatic conditions severely disrupted supply, leaving the company unable to secure sufficient raw materials. As a result, production was suspended once existing stocks were depleted. 

"Despite this, we are actively pursuing alternative sourcing channels and remain optimistic about resuming operations in the near future," the company noted.

Meanwhile, the firm is advancing its previously announced plan to bottle and market soybean and mustard oil, disclosed on 14 February 2022. Rahima Food said implementation is progressing steadily, and it expects to commence commercial operations "very soon."

Following today's disclosure, the share price fell by 2.48 percent to close at Tk157.60.

The company's operational setbacks have coincided with volatile movements in its share price. On 7 July, shortly after the suspension of its coconut oil plant, Rahima's stock was trading at Tk82.20. Over the following 24 sessions, its price more than doubled, hitting Tk168.90 on 11 August—its highest level in a year. 

On 12 August, Rahima Food's board formally decided to keep the cashew nut processing plant suspended until further notice, according to disclosures published on the stock exchanges.