Emerald Oil, a comeback story

After a hiatus of four years, Emerald Oil has successfully returned to full-fledged production thanks to fresh investment, nearly a year of hard work by the reconstructed board and the help of the stock market regulator.

The investment, which came from Minori Bangladesh, a subsidiary of Japanese farming company Minori Co Limited, has brought hope among the shareholders, who are now hoping to get good returns from their investments.

Upon resuming commercial production, the company published a disclosure on the stock exchanges on Sunday.

With its signature product – the rice bran edible oil, branded as Spondon, Emerald Oil has been a profitable firm until 2016. The following year, when a loan scam of its founder came to light, the company started losing business and operation was halted due to a shortage of working capital.

Facing corruption charges, the founder fled the country and it was the shareholders who suffered the effects of a share price drop.

However, after the reconstruction of its board at the beginning of last year, the share price of the company soared by 281% in six months from Tk11 to Tk42 in September.

The Bangladesh Securities and Exchange Commission (BSEC), as a part of its drive to resurrect the listed sick companies, in January last year, dissolved the board and reconstructed it by appointing five independent directors with sound professional backgrounds.

"It was a big challenge to resurrect the dead horse," said a director of the newly constructed board requesting to go unnamed.

"The BSEC gave enormous support regarding settlement of the classified bank loans and other issues," he added.

Earlier, the director told the TBS, "There is a good demand for rice bran oil both in local and international markets. We already received queries from several foreign companies, including two Japanese companies, and signed a trade deal worth Tk10 crore with an Indian company."

To help Emerald Oil turn around, Minori Bangladesh Limited is investing around Tk45 crore as working capital, other than taking care of the company's finances and liabilities with Basic Bank, and Bank Asia amounting to Tk70 crore in loans that crossed the Tk100 crore mark with interest.

The Japanese subsidiary will also help Emerald Oil's potential exports to Japan alongside serving the local market.

As per the agreement, Minori Bangladesh will own 30% shares from the company's directors and sponsors. Besides, Minori has already purchased 8% shares of Emerald Oil from the capital market.

Earlier, in August, Emerald Oil announced it will go into full-fledged commercial production from 1st September, which was later postponed as they could not obtain most of the required licences due to the lockdown.

Emerald Oil, incorporated in 2008, began production of its Spondon-branded rice bran oil in 2011 and entered the bourses in 2014.

The company raised Tk20 crore issuing two crore general shares at a face value of Tk10.

But, in a few years, it melted down both in its business and in the stock market as soon as the founder's loan scams unfolded.

Emerald Oil in the fiscal year 2015-16, generated a profit of Tk 18.07 crore and paid a 10% stock dividend to its shareholders.

According to the Dhaka Stock Exchange (DSE) data, the share price of the company was Tk40.90 each on Monday.

As of December 2021, out of the total shares, sponsors and directors hold 38.26%, institutional investors 6.54%, and general shareholders hold 55.20%.