Unity Foods to acquire edible oil refinery for Rs850m

Refinery has production capacity of 500 tons per day

KARACHI: Unity Foods, the producer of Dastak oil, has announced plans to acquire an edible oil refinery with production capacity of 500 tons per day.

The company, which produces edible oil, industrial fats and various feed ingredients for poultry and livestock sectors, is going to acquire the refinery situated at Port Qasim, Karachi, according to a company notification sent to the Pakistan Stock Exchange (PSX) on Tuesday.

It has struck a deal at approximately Rs850 million, including transfer taxes and other pertinent costs. The acquisition, which is going to take place in three weeks, includes transfer of land, building and running plant and machinery with all ancillary assets.



“There is a big business opportunity in the edible oil sector,” said Unity Foods Limited General Manager Marketing Amir Butt while talking to The Express Tribune.

“The edible oil industry, including the [end] consumer, business consumer and hotel/restaurant/café (Horeca), is showing a good growth, which is why we have made the acquisition decision,” he said.

Pakistan’s per capita edible oil consumption is 20 litres per annum and is growing with increasing population of the country. Moreover, “the industrial segment is also growing fast as new eateries, food companies and food chains are coming to Pakistan,” he said. Food imports of about $3 billion were reported in July-December 2018, of which one-third comprised edible oil imports - $49 million of soyabean oil and $931 million of palm oil, according to the Pakistan Bureau of Statistics (PBS).



Pakistan’s overall market of edible oil is estimated at 4.6 million tons with annual growth of 6.5%. Of that, the oil market constitutes 33% while the vanaspati market has 67% share.

However, the compound annual growth rate (CAGR) of oil had been 14% over the last four years, Amir Butt said, adding vanaspati registered only 2.5% growth during the period. He said edible oil was showing growth in both segments - business-to-business and business-to-consumer. The consumer segment has a 75% share whereas the rest comprises Horeca and industrial segment.

The industry uses cooking oil in consumable products, like chips, biscuits, etc. There are further three areas in the consumer segment - premium segment, popular segment and discounted segment. The premium segment is covered by Habib, Dalda and Supreme which charge premium prices on the basis of their strong brand quality and have 10% share in the total oil market, he said.

Published in The Express Tribune, February 13^th, 2019.

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