Emerald Oil to take more time to resume production

The resumption of production of Emerald Oil Industries, one of the early entrants in the domestic rice bran oil market, is not going to begin from September 1 this year.

The company is going to take more time to restart operation of its factory, which went out of production in 2017, meaning that investors will have to wait to get dividends from stocks.

The rice bran oil maker's shares fell 0.91 per cent to Tk 32.80 at the Dhaka Stock Exchange (DSE) yesterday.

The company on July 12 announced the decision of its regulator-appointed board that it would go into full-fledged commercial operation from September 1 to produce 48 tonnes of rice bran oil and 282 tonnes of de-oiled rice bran.

Yesterday, the company said it could not renew or obtain most of the required licenses till date as all offices were closed from July 23, 2021 to August 10, 2021 due to a strict lockdown imposed by the government to curb the spread of the coronavirus disease.

As a result, it could not complete rescheduling of loans with bank and non-bank financial institutions and transfer shares to Minori Bangladesh, which wants to take over 31 per cent of stakes of the Emerald Oil from the existing sponsors.

"We do not want to go to production without solving legal issues," said Emerald Oil Managing Director Md Afzal Hossain.

The rice bran oil maker, in its posting to the DSE, said it would require more time to resolve the issues and cited the decision of the board to not start commercial operation.

Established in 2008, Emerald Oil launched its rice bran oil brand "Spondon" in 2011. It raised Tk 20 crore from the public to pay off loans and meet working capital needs. It went out of production in 2017 leaving general investors with shares.

Since then, Emerald Oil has not given any dividend.

It is traded as a junk stock at Dhaka Stock Exchange (DSE), the main bourse.

And shares of the company dropped below its book value of Tk 10 in the second half of 2020. It shares recovered later to touch Tk 14.1 each for a brief period and fell below face value in February this year .

Shares began to rise after the Bangladesh Securities and Exchange Commission (BSEC) dissolved the board of Emerald Oil and formed a new one on March 2 in a bid to improve its performance to protect the interests of general shareholders.

The regulator appointed five independent directors at the board of the company.

Since then, Emerald Oil's share rose and hit a two-year high of Tk 37.5 on August 5. Prices dropped later but still traded three times higher the book value, showed data by the DSE.

Hossain said there was no reason behind the increase in share prices as the company was not in production.

Ahsanur Rahman, chief executive of Brac EPL Stock Brokerage, said investors should not park their hard earned money on stocks of companies which were not in production.

Investors should be careful, he said.