A semai mill borrowed Tk 20 lakh to expand, then demand fell and it is near closing
A loose-semai mill in Jashore took a Tk 20 lakh loan to expand after a good first year. Demand for loose semai fell the next year, then came Covid; now, buried in debt, the mill is close to shutting.
About six years ago a semai mill opened at the High Court crossing in Shekhhati, Jashore, making handmade loose semai. Because business was good in the first year, the owner took a loan of Tk 20 lakh to scale up production. But from the very next year, demand for loose semai on the market began to fall, and then came Covid. The business never recovered; now it produces only when orders come in, with a few workers. In the owner's words, because fried and lachha semai are in greater demand, loose semai does not sell as it used to, and production costs have risen several times over. The manager of another mill in the same town said that in Ramadan they used to sell an average of 1,000 kg a day, now down to 400–500 kg. A kilo of loose semai sells wholesale at Tk 45–50, while the production cost is Tk 42–48, and on top of that it is sold on credit. According to the report, more than 25 handmade semai factories in Jashore have closed in five years, because most of the market has been taken over by big companies' packaged semai.
Lessons
- 1.Before borrowing big on one good year, check where the market is heading (from loose semai to packaged and lachha).
- 2.With a margin of Tk 2–8 a kilo and sales on credit, any cost rise turns loose semai into a loss; price and credit limits need real numbers.
We published this with the person's permission, without revealing who they are.
Discussion
Nobody has written anything yet. You can be the first.